Bankruptcy and Members of the Military

If you are a member of the U.S. armed forces, a reservist, or member of the National Guard, you can file for bankruptcy just like any civilian. However, Congress has provided some special rules for servicemembers filing for bankruptcy. For example, disabled veterans and certain reservists and members of the National Guard are exempt from the bankruptcy means test (that's the test that keeps higher income earners from filing for Chapter 7 bankruptcy). And the Servicemembers Civil Relief Act gives bankruptcy courts the power to stay or postpone bankruptcy proceedings while you are on active duty.

If you are in the military or plan to become a servicemember, however, you should carefully weight the effect bankruptcy will have on your enlistment and security clearance. In many cases, it won't matter -- but it could.  

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