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Special Considerations for Military Filers

Our men and women in uniform face unique challenges and make tremendous sacrifices for their country. In recognition of that, there are several special considerations and exceptions made when a bankruptcy filer is active or retired military. (This list is not exhaustive.)

Bankruptcy and Active Duty
The Servicemembers’ Civil Relief Act (SCRA) provides additional, specific protections for active-duty military personnel in regards to civil lawsuits, including bankruptcy. These protections extend to all branches of the military, as well as the commissioned corps of the National Oceanic and Atmospheric Administration (NOAA), the activated National Guard, and the commissioned corps of the Public Health Service. The SCRA allows courts to “stay” or put on hold any civil suit (including bankruptcy) that involves active-duty military personnel. This SCRA stay is in addition to the automatic stay that comes with filing bankruptcy.

The Means Test
Reservists who are called to active duty are cut some slack when it comes to the means test. They still have to complete the means test, but they are granted a 540-day extension in which to do so if they are active for at least 90 days.

Credit Counseling
Normally, a person must complete a credit counseling course in order to file bankruptcy. An exception to that rule is allowed for anyone on active duty at the time of filing bankruptcy.

Security Clearance
Bankruptcy does not automatically impact a person’s security clearance, but before filing bankruptcy, it is a good idea to check to make sure it won’t have a negative impact. Security clearance is decided on a case by case basis and many factors influence it. Sometimes filing bankruptcy can even have a positive impact on it (since it can be seen as a step toward better financial management).

Bankruptcy and Veterans
The Means Test
Disabled veterans don’t have to complete the means test if they meet certain criteria. Their disability must be rated at 30% or more or they must be discharged from active duty because of a disability received or aggravated in the line of duty. Also, the majority of the debt to be discharged must have been incurred while the veteran was on active duty. If these criteria are met, however, the veteran does not need to complete the means test and is more freely able to file a chapter 7 bankruptcy.

Military Pensions
As long as they have not been funded for at least a year prior to filing bankruptcy, military pensions are usually considered exempt in a bankruptcy. This would include VA disability pensions, as well.

The Most Important Part
Whether on active duty or a veteran, military service makes a Kansas bankruptcy that much more complicated.  We at Mack and Associates recognize that. We honor those who serve our country and want to serve them in return. To honor those who have provided military service to our country, we provide a 10% military discount to all active, retired and disabled soldiers and their families.


These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!