Bankruptcy for Military Personnel

Information on Bankruptcy for Military Personnel

Attorney Robert Vanhemelrijck has extensive experience representing San Antonio area military personnel (active military, reservists, and veterans) in obtaining bankruptcy protection. If you are currently in the military or if you are a veteran, and you are considering Chapter 7 or Chapter 13 bankruptcy, please read the information below. You can also call our San Antonio law office for more information and to schedule a free consultation with our attorney.

If I file bankruptcy will I lose my security clearance?

It has been our experience, at Vanhemelricjk Law Offices of San Antonio, that military personnel, when faced with insurmountable debt, are actually able to protect their security clearance by filing bankruptcy. While it is not unusual to lose ones’ security clearance by having large amounts of debt, garnishments, and lawsuits related to debt, dealing with the debt in a legal and responsible manner (ie, bankruptcy) has not resulted in losing security clearance for our clients. Also know that we have had clients come to our office because they were recommended by military personnel to utilize bankruptcy protection to avoid losing their security clearance. In fact, we have had clients use bankruptcy protection so they could reinstate their security clearance.

Does your law firm offer a discount to military personnel?

Yes. We offer a discount on attorney’s fees to military personnel. We also have very flexible payment plans to meet your needs. Attorney Robert Vanhemelricjk will be happy to discuss pricing with you, either on the phone or in person during a office consultation.

Can I file bankruptcy if I am active duty military?

Yes. As active duty military you may file bankruptcy and you will still have all the protection of the bankruptcy court as a civilian would.

What are the most common reasons that military personnel file for bankruptcy?

The most common reasons that military personnel consider filing bankruptcy are: divorce, loss of income, disability, and death of a spouse. The U.S. Bankruptcy code was established by our founding fathers who understood that tragic and unfortunate events will occur causing good, responsible citizens to need a fresh financial start.

I feel that if I file for bankruptcy, I am cheating my creditors and/ or not being responsible.

Sometimes, due to circumstances beyond our control, it is just not possible to afford housing, food, and transportation and to make payments on other bills. Often, when we look at a client’s income and the amount of credit card debt that they have, we see that it is mathematically impossible to make the minimum payments and to ever repay the debt. By the time that most people reach the point of considering bankruptcy, they have tried to work with their creditors to make affordable payment arrangements. When you file bankruptcy, your creditors will understand that you cannot repay the debt at this time and then the creditors can stop spending resources trying to collect money from you. Even if you file bankruptcy you may still elect to repay your creditors at a later date, should you choose to, but it will be your choice.

And if you qualify for Chapter 7, the fact that you qualify to file a Chapter 7 is proof that you are truly unable to repay this debt. If you could afford to repay them, you would not qualify to file a Chapter 7.

Is my Military Star Card debt dischargeable through a bankruptcy?

Yes. Any money that you owe on a Military Star Card is dischargeable in a bankruptcy. If you would prefer to pay this debt back, you can elect to do so after the bankruptcy, but again, it would be your choice after the bankruptcy to do so.

Given that my BAH (Basic Allowance for Housing), BAS (Basic Allowance for Subsistence) pay is not taxable, is it included in the Means Test to determine eligibility to file Chapter 7 Bankruptcy?

Unfortunately, the bankruptcy code includes all pay, other than income received under the social security act and payments to victims of war crimes and terrorism. However, even if you do not qualify to file Chapter 7, you may still file Chapter 13 bankruptcy. A Chapter 13 bankruptcy can provide a tremendous financial relief to those who are dealing with credit card debt and/or are behind on mortgage payments or car payments.

How does a Chapter 13 Bankruptcy work?

A Chapter 13 bankruptcy allows a debtor to repay their debts (or typically, a small portion of their debts), through affordable monthly payments over 36 to a maximum of 60 months. Your payments are determined based on what you can afford to pay after you pay your necessary monthly living expenses (housing, food, emergency money, childcare, student loans, medical costs, transportation, and some other expenses). Any debts not paid in-full at the end of the 60-month period are discharged (eliminated).

Are VA benefits (GI Bill, VA disability, VA retirement) included in the Means Test to determine eligibility to file Chapter 7 Bankruptcy?

Yes, these types of income are included in the Means Test to determine eligibility to file a Chapter 7. However, we have had success getting our clients to qualify for a Chapter 7 when other firms have not. The reason is that over the many years of working with military personnel we have learned how to maximize the exemptions to the income limits for Chapter 7. The result is that with hard work our firm may still be able to qualify you for a Chapter 7 fresh start bankruptcy.

However, if you do not qualify to file a Chapter 7, you may still file a Chapter 13 bankruptcy which will allow you to make affordable monthly payments on your debts. In fact, most people are surprised when they learn just how affordable Chapter 13 payments are.

As a veteran, am I automatically excluded from the Means Test?

No. However, if you are a disabled veteran and you incurred more than 50 percent of you’re your debt while on active duty, then you are excluded from the Means Test. (Per §707(b)(2)(D) Subparagraphs (A) through ©.).

I am having trouble paying my bills, but how do I know if I should file bankruptcy?

During your free consultation, our attorney, Robert Vanhemelrijck, will look at your entire financial situation and help you determine if it makes financial sense for you to file. If it doesn’t make sense for you to file bankruptcy or if there is a better way for you to take care of your debts, he will let you know.

I have heard of a Chapter 13 for people with lots of credit card debt, but I can't afford the minimum credit card payments. Can I really afford a Chapter 13 payment?

Yes. The monthly payment to your unsecured creditors (e.g., credit cards, medical bills, and personal loans, etc.) comes after you pay your monthly secured debt payments (house and cars) and after your monthly living expenses. Only what is left can be used to pay the unsecured debt. Typically, you will pay only a small percentage of what you owe to your unsecured creditors. And the Chapter 13 plan only lasts 36 to 60 months. After that time, any remaining balances on the unsecured debt are eliminated.