Nearly 9 out of 10 active service members need help with their finances. Inflation hasn’t helped.
Yet many service members are terrified to file for bankruptcy.
You have the same rights to file for bankruptcy as civilians do. While we recommend talking to your commanding officer and an attorney like Michelle, it’s more common than you might believe.
1 in 10 active-duty military members file for bankruptcy every year.
Bankruptcy Can Protect Your Security Clearance
Service members relying on a security clearance to keep their jobs often fear filing for bankruptcy will jeopardize their service. In reality, the opposite is true.
Once you file for bankruptcy, the debts, past-due payments, and other liabilities will go away. Your commanding officers will likely see you as less prone to bribery or blackmail.
Don’t let outdated ideas about whether bankruptcy is immoral or irresponsible guide your financial future.
Pay Attention to Military Benefits
Be aware that some military benefits impact your bankruptcy.
First, if you have a Military Star Card, you should list it with your other debts and liabilities on your bankruptcy schedules. It’s a dischargeable debt and part of your overall financial profile.
Second, if you received a housing waiver and broke a lease, the landlord has to return the waiver after filing for bankruptcy, even if you haven’t paid the rest of the lease.
It May Be Possible to Cancel Student Loans
Do you have federal Perkins loans?
Perkins Loans work differently than other student loans. You can take advantage of loan cancellation.
If your student loans are creating the bulk of your financial stress, consider cancellation before bankruptcy.
If they’re only a piece of the puzzle, look into cancellation anyway. You won’t be able to discharge them through bankruptcy, but the government will cancel up to 50% of your loans for four years of service if your service ended before August 14, 2008. If you’ve served for up to 5 years since August 14, 2008, you may get 100% of your loans canceled.
Schedule a Free Consultation Today
Regardless of whether you’re an active service member or a civilian, bankruptcy can be complicated. If you’re considering filing, get straightforward advice to help you complete your bankruptcy successfully.
Contact Labayen Law for a free consultation today. We’ll help you decide how best to secure your financial future.