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Military Bankruptcy

Military Bankruptcy

 Military Bankruptcy

Department of Defense policy states that “members of the Military Services are expected to pay their just financial obligations in a proper and timely manner. A service member’s failure to pay a just financial obligation may result in disciplinary action under the Uniform Code of Military Justice.”

However, most of the time the indebtedness is unavoidable, unexpected or too late to reverse. Fortunately, the DOD acknowledges your right under federal law to avail yourself of bankruptcy to resolve your financial difficulty.

Most of the time your financial situation is not a concern of the military until it is brought to the attention of your commander or your security clearance office.

Even at that point we can intervene with a bankruptcy and explain to your command and security processor to reverse the damage. Don’t wait until the military is threatening to separate you from service. Call today and meet with one of our experienced attorneys to help you take your financial stress away and let you focus on the mission and your family.

Military Bankruptcy FAQ

Question: Will I lose my security clearance if I file bankruptcy?

Fact: Bankruptcy alone is not a disqualifier to retaining or receiving a security clearance.  In fact, it can save your job and clearance. Generally, an individual who is delinquent on his/her debt has a greater risk of losing their clearance.  A bankruptcy eliminates the debt or sets up a repayment plan with the creditor.

Question: Will the creditors continue to contact my Command after filing bankruptcy?

Fact: No. We will notify them immediately upon filing to discontinue all communication with your command. Filing of bankruptcy prohibits creditors from attempting to collect on a debt.  Contacting your command would be in direct violation of your bankruptcy protection and could subject the creditor to sanctions.

Question: Can the JAG office assist me with a bankruptcy?

Fact: No. The local JAG office can not represent you in a bankruptcy proceeding.

Question:  Can I be booted out of the military for filing bankruptcy?

Fact: No. Under the UCMJ Article 134, you can be separated from services for failure to pay your debt.  However, bankruptcy is considered a federal right, and assuming no other disciplinary issues, will generally eliminate this as a concern.

Question: Will my Command be notified that I filed bankruptcy?

Fact: No. We do not notify your command of your bankruptcy filing.  If your pay is being garnished, DFAS will have to be notified of the filing to halt the garnishment.

Question: Can I eliminate my STAR Card debt in a bankruptcy?

Fact: Yes. While the STAR Card has special status outside of bankruptcy by virtue of being affiliated with the military, in a bankruptcy it has no special status.  It can be eliminated without any ramifications to your military career.

Question:  Will filing bankruptcy keep me from getting promotions or affect my evaluations?

Fact: No.  In as much as your Command is not notified of your bankruptcy filing, this information is not available to them and therefore does not affect promotions and evaluations.

Question: Does my bankruptcy filing affect my spouse if they do not file?

Fact: No. Your filing does not affect your spouse. Filings are tracked by name and social security numbers.  If your spouse chooses not to file with you their name and social does not appear on the petition.


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Content approved for publication

by John G. Merna

Key Word: Luke Air Force Base