New Jersey Bankruptcy Filing Attorney for Members of the Military
People who serve in the U.S. military are entitled to take advantage of the protections of federal bankruptcy relief – the same as any ordinary civilian. However, military personnel and disabled veterans have some advantages over a typical bankruptcy debtor. Unfortunately, there is at least one potential disadvantage. Filing for bankruptcy could negatively impact a service member’s security clearance.
Military personnel are afforded some additional protections. Congress foresaw that service members would not always be in the position to file a timely answer to a foreclosure action or other lawsuit. The Servicemembers Civil Relief Act (SCRA) addresses this issue and others.
Service members are not immune to financial hardships or economic stress. The New Jersey bankruptcy attorneys at Young, Marr & Associates are proud to offer our country’s military personnel and veterans the professional and experienced representation they deserve. To review what protections bankruptcy provides military members, call (609) 755-3115.
Chapter 7 Bankruptcy Filings for New Jersey Military Personnel
Chapter 7 bankruptcies were designed to be finalized in four to five months. In most cases, a debtor will not be required to make any payments to their creditors. Military personnel can take advantage of federal and state exemptions to protect their assets. While Chapter 7 could free a service member from many types of debts, they will not be able to discharge child support, alimony, certain taxes, and most student loans.
By filing a Chapter 7 bankruptcy, a service member could stop wage garnishments, lawsuits, collection letters, and calls. Military personnel can discharge debts to their landlords – forcing the return of housing waivers held against unpaid rents. A Chapter 7 bankruptcy usually only takes a few months from the filing date to the final discharge. This means you can begin rebuilding your credit almost immediately.
Chapter 13 Bankruptcy Filings
In a Chapter 13 bankruptcy, you will have to make a monthly payment to a court-appointed trustee. The amount you pay will depend on your income, assets, and the type of debt you have. Our New Jersey bankruptcy attorney will look to these same to determine if your case lasts three or five years. Additionally, the court must approve this reorganization plan.
Military personnel can request that their paychecks are garnished to pay their trustee payment. You could also include your tax refunds. A garnishment often makes it easier to ensure the payments are made each month. It is important to note that a wage order in bankruptcy is a court order. If you fail to make timely payments, the trustee will motion the court to dismiss your case
Means Testing for Disabled Veterans and Active Personnel in a New Jersey Chapter 7 Bankruptcy
When someone files a Chapter 7 bankruptcy, they are generally required to pass a means test. Congress instituted the means test to ensure that debtors filing Chapter 7 did not have enough disposable income to pay their creditors. For many potential filers, the means test serves as a roadblock or a detour to Chapter 13.
If you are a disabled veteran, you might be excused from the means test. If your debt was accumulated while you were on active duty or serving in homeland defense, you are exempt from the means test. To be considered disabled under the Bankruptcy Code, a veteran must have a disability rating of 30% or higher or was discharged from active duty because of a disability sustained while in service.
If you are a member of the U.S. Armed Forces or the National Guard that is currently on active duty or called up for service for a minimum of 90 days, you are also excluded from the means test. It is important to note that while this exclusion is temporary, it does not end when your active service ends. You will be exempt from the means test for the following 540 days following your active service.
If you have been on active duty, you do not want to lose this temporary exemption because you waited too long to file. Be sure to discuss your service history with our experienced New Jersey bankruptcy attorney to ensure your case is timed to take advantage of this benefit.
Filing for Bankruptcy May Affect Your Security Clearance
While bankruptcy could impact a service member’s security clearance, it is not automatic. Several factors will influence your security clearance. For example, it could be adversely affected by delinquent or large debts, your job performance, or your relationship with fellow military personnel or superiors.
The first item in the list above is delinquent or large debts. These are not caused by bankruptcy. Rather, they are the reasons people feel the need to file for bankruptcy protection. Therefore, it is possible that filing for bankruptcy could improve your position regarding your security clearance. It shows that you are taking proactive steps to address your financial issues. However, each security clearance question is assessed on a case-by-case basis. While our New Jersey bankruptcy attorneys are able to assist you with the process, you need to speak with your superior officers to understand how a bankruptcy will impact your unique situation.
Contact Our New Jersey Bankruptcy Filing Attorneys for Members of the Military for a Free Consultation
Members of the U.S. Armed Forces face many of the same financial hurdles and dilemmas civilians face. Additional struggles exist when military personnel are stationed away from home, either overseas or in another state. At Young, Marr & Associates, our New Jersey bankruptcy filing attorneys for members of the military are proud to offer our thirty years of experience to active military personnel and veterans. Call (609) 755-3115 to schedule a free consultation.