If you are currently enlisted in the military, including branches like the National Guard, or if you are a veteran or wounded in action, you may be entitled to certain exemptions and special requirements when filing for bankruptcy.
Disabled veterans are not always required to pass the “means test.” The means test a financial check list which considers both income and debt to determine whether or not you are eligible to file for Chapter 7 bankruptcy. Wounded or disabled veterans are not required to pass the means test under the following circumstances:
This also means that military disability compensation will not be included in your income for the purposes of a Chapter 7 bankruptcy, regardless of the amount you receive or the amount of time you’ve been receiving it.
Individuals enlisted in the National Guard will be able to opt out of the means test in the following situations:
These rules are set by the National Guard and Reservists Debt Relief Extension Act of 2015, which as of January 2016, extended these exemptions until 2019 at which point they will be reconsidered.
Veterans benefits may be exempt as assets if:
Please note, benefits will still count towards income in the means test, unless they are subject to the exceptions for disability or service in the National Guard.
The Servicemembers Civil Relief Act 2003 allows for a number of protections against foreclosures, evictions, debt collections and wage garnishments. The SCRA is particularly important for delaying or stopping:
It is important to consult with an attorney before attempting to proceed with bankruptcy if you are or were a member of the United States military. Depending on the state you live in and your personal circumstances, you may be eligible for a number of benefits or exceptions. Make sure you are fully informed before you make any decisions regarding your bankruptcy.