Facing Debt After Deployment? Bankruptcy Could Offer Relief Without Risking Your Benefits
by Luke Homen
If you’ve returned from deployment to find yourself buried in debt, you’re not alone. Many service members come home to discover their financial situation has gotten worse while they were away.
The good news is that bankruptcy can help you get out from under that debt without touching your military benefits. Your VA disability payments, military retirement, and other benefits are protected in bankruptcy, which means you can get a fresh start without losing what you’ve earned through your service.
At Convenient Bankruptcy, our Oklahoma bankruptcy lawyers know how bankruptcy works for veterans and active duty service members and what benefits are safe from creditors. Call our law firm at 405-639-2099 to begin learning about which bankruptcy might be your best option for dealing with post-deployment debt.
Why Military Members Face Unique Financial Challenges
Deployment creates financial stress that most civilians never experience. Your family back home might struggle to manage bills without you. Predatory lenders often target military communities near bases. You might have taken out high-interest loans before shipping out, thinking you’d catch up later.
Add in the fact that service members move frequently, making it hard to build stable banking relationships or challenge incorrect bills. Some veterans return with disabilities that make it harder to earn what they once did. Medical bills can pile up even with military healthcare. The combination of these factors means military debt problems need military-focused solutions.
Your Military Benefits Are Protected in Bankruptcy
Here’s what matters most: federal law protects your military and veteran benefits from bankruptcy creditors. When you file for Chapter 7 or Chapter 13 bankruptcy in the US, these benefits cannot be taken to pay your debts:
- VA disability compensation
- Military retirement pay (generally protected as an asset, but may be counted as income in a Chapter 13 repayment plan)
- GI Bill benefits and education payments
- Service members’ Group Life Insurance (SGLI) proceeds
- Veterans’ Group Life Insurance (VGLI) payouts
- Survivor benefits
Specifically, the HAVEN Act excludes VA disability compensation, combat-related special compensation, and other specific disability pay from the Means Test, making it easier for many service members and veterans to qualify for Chapter 7 relief.
Bankruptcy Won’t Hurt Your Security Clearance
Many servicemen and women are worried that filing for bankruptcy will hurt their security clearance. The good news is that it won’t.
The U.S. Department of Defense updated its guidelines to recognize that financial problems don’t automatically disqualify someone from holding a clearance.
What actually threatens your clearance is ongoing financial irresponsibility and ignored debt. Creditors start calling your command. Judgments begin piling up. Accounts start going into collections. These create the appearance that you might be vulnerable to bribery or coercion. Filing bankruptcy shows you’re taking responsible action to handle your debts legally. It demonstrates you’re solving the problem rather than hiding from it.
The Servicemembers Civil Relief Act Gives You Extra Protection
The SCRA provides special bankruptcy protections for active duty members. If you’re on active duty and file for bankruptcy, creditors face additional restrictions on what they can do. The court can stay (pause) bankruptcy proceedings to accommodate your military service. If you’re deployed, you can’t be forced into default judgments.
The SCRA also caps interest rates at 6% on debts you took on before entering active duty. This applies to credit cards, car loans, and mortgages. If you’re paying more than that, you need to notify your creditors and provide your military orders. This protection alone can save you thousands, and it works alongside bankruptcy to give you maximum relief.
When Bankruptcy Makes Sense for Military Debt
Consider bankruptcy if you’re facing any of these situations:
- Credit card balances you can’t pay off within two years, even with aggressive payments
- Medical bills from non-service-connected conditions that insurance didn’t cover
- Repossession or foreclosure notices on vehicles or property
- Wage garnishment affecting your military pay
- Collection calls that are interfering with your work or family life
Bankruptcy isn’t right for everyone. If you have mostly student loans or recent tax debt, bankruptcy won’t help much because these debts generally aren’t dischargeable. If you can realistically pay off your debts within a year or two, you might want to try that first.
But if your debt would take years to pay off, or if creditors are already taking legal action against you, bankruptcy might be your best tool for getting back on solid ground.
Contact Our Oklahoma Bankruptcy Lawyers Today
Military service members and veterans have unique financial challenges, but they also have unique protections. Bankruptcy law recognizes your service and shields your benefits from creditors.
If you’re dealing with overwhelming debt after deployment, talk to a bankruptcy attorney at Convenient Bankruptcy who understands military financial issues. You can learn your options without any obligation. You’ve served your country. Now it’s time to take care of yourself and use the protections that exist specifically for service members like you.
Call Convenient Bankruptcy at 405-639-2099 for a consultation or fill out our confidential contact form to learn more about how bankruptcy might work for you.
Attorney Luke Homen is the President of Convenient Bankruptcy. He places great value on helping individuals and families solve their financial challenges and achieve real financial freedom. His goal is to find a customized solution that fits each client’s unique situation. Luke has been practicing law since 2008, and was voted “Best Bankruptcy Attorney in Oklahoma” by The Oklahoman in the Reader’s Choice Awards.
