What happens when a military member runs into financial difficulties they can’t manage?
For many people who face financial challenges, bankruptcy is the answer. But is it possible to file for bankruptcy while serving in the military?
The answer to that question is yes, but with some limitations. Here’s what you need to know.
Military Guidelines
Firstly, it’s essential to understand that being in the military doesn’t shield service members from bankruptcy. It is still possible to file for bankruptcy while serving in the military. However, there might be ways filing affects your military career.
You might want to consider discussion your situation with your commanding officer before filing. If you’re uncomfortable doing this, speak to a bankruptcy attorney about what you need to know.
Types of Bankruptcy
There are different types of bankruptcy. Military members often choose one of the two most common types of consumer bankruptcy: Chapter 7 or Chapter 13.
Chapter 7 bankruptcy allows for the cancellation of all dischargeable debts. Chapter 13 bankruptcy involves restructuring the debts into a repayment plan. Military members must understand the differences between the chapters and the circumstances for which each applies before proceeding with filing for bankruptcy.
Bankruptcy and Your Military Career
Keep in mind the impact filing for bankruptcy can have on a military career. Filing for bankruptcy may result in the loss of a security clearance, which is integral for many military roles. Losing a security clearance could lead to a reassignment. There might be other disciplinary actions too.
Finally, make sure you seek professional advice when looking to file for bankruptcy. This is true whether you are an active military member, a veteran, or anyone else. Several nonprofits and law firms specialize in working with servicemen and women facing financial difficulties. As such, individuals seeking bankruptcy relief should consult experts in the field who will provide professional advice in dealing with creditors and bankruptcy courts.
Can You Make Too Much to File for Bankruptcy?
When most people think of bankruptcy, they imagine individuals who have lost everything and have no means of paying off their debt. However, the reality is that bankruptcy is much more complex than that.
While it may seem that you must be broke to file for bankruptcy, this is not always the case. In fact, some people may find that they make too much money to file for bankruptcy. So, can you make too much to file for bankruptcy?
Here’s what you need to know.
Can You Earn Too Much to File for Bankruptcy?
In short, the answer is yes. You can make too much to file for bankruptcy.
This is because bankruptcy is intended to help individuals who are struggling to pay off their debts and need a fresh start. If you make too much money, the court may assume that you have the means to pay off your debts and may deny your bankruptcy petition.
However, this does not mean that high-income earners are completely ineligible for bankruptcy. It simply means that they may need to navigate some additional hurdles to get approved.
Chapter 13
One option for high-income earners is to file for Chapter 13 bankruptcy. This type of bankruptcy involves creating a repayment plan and paying off your debts over a period of three to five years. Because high-income earners have more disposable income, their repayment plan will likely be more substantial than someone who earns less.
However, if the debtor’s income is still too high for the Chapter 13 option, they may still be able to file for a Chapter 7 bankruptcy.
For those that do not qualify for Chapter 13, Chapter 7 is the other option. However, if you make too much money, you may face some obstacles in getting approved for Chapter 7. The court will consider your income, expenses, assets, and debts to determine if you are eligible.
Additionally, your eligibility for Chapter 7 may also depend on your state’s median income. In some cases, if your income is over a certain threshold, you may be required to take a means test to determine your eligibility.
The best thing you can do, as a high-income earner or otherwise, is contact an experienced bankruptcy attorney to discuss your case.
