Rules about Bankruptcy for those in the Military

Rules_Skrupa LawIf you are in the military, filing for bankruptcy may be better and easier for you than when you were a civilian. However, it could affect your security clearances. Skrupa Law Office, LLC in Omaha and Lincoln wants to inform you about the differences in bankruptcy for military personnel and how to deal with it. Read on to find out more.

Are you a Disabled Veteran?

If you are a disabled veteran, you could be exempt from the means test that a normal debtor usually must take. The means test is meant to disqualify people from filing Chapter 7 bankruptcy if they have enough disposable income to pay back part of their debts. Chapter 7 usually eliminates all of a person’s debt and allows them to receive a fresh start.

However, if you are a disabled veteran of 30% or more and your debts accumulated while on active duty or if you were discharged because of an injury caused during the line of duty, then you do not have to take the means test.

Are you a Reservist or National Guard Member Called to Active Duty?

If you are a reservist or in the National Guard and were activated for at least 90 days after September 11, 2001, then you are also excluded from taking the means test while on active duty and 540 days after.

However, the attorneys at Skrupa Law want to inform you that you are still required to take the means test after your 540 days are up.

How will Bankruptcy Affect your Security Clearance?

If you are active duty military or a government employee and file for bankruptcy, it does not automatically interfere with your security clearance. It will depend on your position within the military or government, why you filed bankruptcy, your relationship between your boss and coworkers, and how well you perform your job.

If you have accumulated a large amount of debt, that could affect you clearance; however, filing for bankruptcy could help because you are taking steps to improve your situation. Skrupa Law advises you to check how bankruptcy will affect your security clearance before filing.

Service members’ Civil Relief Act

The Service members’ Civil Relief Act (SCRA) passed by Congress in 1940 protects active duty personnel from some legal actions while on active duty. The following are some protections offered by SCRA:

  • Terminate residential leases entered into before you go on active duty
  • Terminate automobile leases in certain circumstances
  • Seek protection from eviction under SCRA
  • Collateral cannot be repossessed while on active duty if the contract was entered into before you start active duty.
  • Have your interest rated capped at 6% on financial obligations such as credit cards
  • Stay (delay) court proceedings while on active duty

Contact Skrupa Law Today at (402) 571-2900 (Omaha) and (402) 464-3311 (Lincoln)

First and foremost, the attorneys at Skrupa Law want to sincerely thank you for your service to our country and protecting our freedom. Since you have made this sacrifice, we want to help you get back to a normal life without debt leering over your shoulder. If you have questions about how bankruptcy will affect you as a member of the military, please contact us today at (402) 571-2900 in Omaha or (402) 464-3311 in Lincoln. We would be honored to help you in any way we can.

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