Filing for Bankruptcy in the Military in Arizona
Service members and military veterans experience financial hardships much like civilians do. According to the National Bankruptcy Forum, one in 10 active duty personnel will go through a bankruptcy filing. Are there any special rules or directives military members in Arizona need to be aware of when going through the filing procedure?
Military Financial Responsibility
Members of the military are held up to a higher standard when it comes to many aspects of their life.
The military works hard to ensure that all personnel who have security clearance are financially responsible. It’s still possible to do a bankruptcy filing and be in the military. The reasons that have contributed to financial issues, however, are incredibly important.
The security clearance of a military member will be unaffected by a one-time financial problem. Going through a divorce, for example, and struggling financially as a result of the separation would make it possible to do a bankruptcy filing without facing any consequences.
Bankruptcy linked to irresponsible behavior like gambling or a criminal conviction, on the other hand, will have a definite impact on one’s security clearance.
If you are facing serious debt, you may want to talk to a counselor or your superior. There are ways to handle the situation and bankruptcy may be one of the viable options. In fact, you will benefit from certain protections when you are a member of the military and you are going through a bankruptcy filing.
Click here to find out what happens when you file for divorce during bankruptcy.
There are several military exemptions that are exclusive and inapplicable to members of the general population.
For a start, some members of the military are exempt from passing the Arizona means test when attempting to qualify for Chapter 7 bankruptcy. The means test is an absolute essential for everybody else and people who have above median income cannot do a Chapter 7 filing.
The exemption applies to disabled veterans and members of the National Guard/reservists. The exemption does come with a couple of conditions.
For disabled veterans, there is no need to pass the means test whenever a person is seeking to discharge debt mostly acquired during active duty or while performing activities pertaining to homeland defense.
Qualifying disability for the means test exemption is defined as a rating of 30 percent of disability or more under the Secretary’s disability compensation rule or a discharge/release from active duty due to the nature of the disability.
Reservists and National Guard members are eligible for the means test exemption if they’ve been on active duty for a continuous period of 90 days or they have done a bankruptcy filing within 18 months of leaving active duty.
Pre-Bankruptcy Credit Counseling Is Essential!
As already mentioned, military members will come under close scrutiny due to the financial responsibility requirements applying to them.
You will have to complete pre-bankruptcy counseling before moving forward with the filing itself. This is a mandatory condition for all civilians going through the process and the same applies to military members.
The only individuals exempt from this requirement are military members who are in a recognized military combat zone. In such instances, the filing can go through without adhering to the standard procedure.
As a military member, you’re also entitled to protection under the Civil Relief Act of 2003.
The Civil Relief Act is a federal law that protects members of the military from debt collection. It can either prevent or postpone foreclosures, bank attachments, evictions, wage garnishments and debt collection default judgments.
See an expert to discuss the specifics of your situation and the protections you are entitled to as a member of the military. Going through a bankruptcy filing may be the best thing for you but chances are that other options also exist and are worth exploring.
Click here for an article on bankruptcy for military personnel.