Military Service and Chapter 7 Bankruptcy

military Service and Chapter 7 BankruptcyFinancial troubles can strike anyone, even those within the various branches of the US military.  What happens when a service man or woman finds that their financial situation is in turmoil, though?  What occurs when someone in the military has to file Chapter 7?

Actually, depending on your branch of service, there can be some advantages.  For example, those within the National Guard and the Reserves are exempted from having to take the means test, which can be a real advantage.

However, it might not be as simple as you imagine. For instance, in order to bypass taking the means test, you will have to file for bankruptcy no later than 540 days after your last 90-day period of active duty.

Another area in which military personnel are excluded from the means test is with disabled veterans.  Disabled veterans who qualify are not required to take the means test, which can fast track a bankruptcy filing and lead to financial relief much more quickly.

However, in order to qualify, the disabled veteran must be able to prove that the majority of his or her debts were incurred while on active duty.  In addition, the service member must be rated at least 30% disabled by the Department of Veterans Affairs.

Finally, disabled veterans are often at an advantage even if they must go through the means test.  The US Trustee’s Office very rarely declines the discharge of debts through bankruptcy for service members, unless they have very high income levels.

A skilled attorney can also find a number of other benefits for you, such as linking your Chapter 7 to your military service even if some of your debts were incurred before active duty, such as the purchase of a home.  As active duty can certainly have an effect on ongoing debts, this relationship can usually be established with relative ease, leading to more benefits.

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