Common Military Bankruptcy Challenges in Kentucky

Filing for bankruptcy is rarely simple. Military personnel located at Fort Campbell and National Guard members with homes throughout Kentucky encounter extra challenges when dealing with legal matters. Military life is full of financial stressors. These unique challenges can affect both the debt you face and your ability to repay under bankruptcy protections. Knowing the common military bankruptcy challenges in Kentucky can help you handle the process with confidence.

Why Military Bankruptcy Is Different

Bankruptcy isn’t something that only civilians should worry about, and there are several protections available in bankruptcy for military members and veterans. One of these is the right to request a delay or even a suspension of your case under the Servicemembers Civil Relief Act, or SCRA.

SCRA gives military members certain protections that recognize the demands of military service. Service members from Kentucky, if you are called to active duty and can’t appear in your bankruptcy case, you have the right to request that the court grant you more time to meet deadlines like credit counseling and filing requirements.

When filing in Kentucky, you must consider both federal exemptions and Kentucky’s state laws. Veterans’ disability benefits, along with military pensions, remain protected from bankruptcy trustees when exempted according to state or federal laws.

Military Bankruptcy Challenges

Military families face economic challenges that most civilians never experience. Many of these financial disruptions can be the result of a PCS move, delayed separation pay, or an unexpected deployment that disrupts normal income streams.

Active duty service members often express concern that bankruptcy might trigger loss of clearance or negatively affect their military careers. Bankruptcy seldom leads to security clearance loss, whereas unpaid debts significantly harm clearance status. Timely bankruptcy submissions often demonstrate appropriate financial conduct that prevents delinquency from becoming a major concern during clearance evaluations.

One significant obstacle service members encounter during bankruptcy proceedings involves coordinating their military orders with civilian court dates alongside their relocation schedules. Under the SCRA, active duty military personnel can postpone or pause legal proceedings when military duties create scheduling conflicts with existing legal obligations.

Active duty service members must apply for legal protections through written requests that include their military orders for court approval.

Pros and Cons of Filing as a Service Member

CFPB research shows that younger veterans, particularly those who separate in their first three years, see a significant decline in their credit score during the first year after separation and are more likely to have account delinquencies, collections, and repossessions.

Declaring bankruptcy can give you a fresh start. After bankruptcy, you can reduce or eliminate stressors like debt, retake control of the family budget and household spending, and have peace of mind and legal certainty. When managed with the help of a Kentucky military bankruptcy attorney who’s aware of military bankruptcy cases, paperwork, PCS moves, and your SCRA rights, it can be easier than you might think.

The negatives include a record that will appear on your credit report and may be visible in background checks. Some debts will not be discharged, like delinquent child support or defaulted student loans. If you decide to reenlist or commission, you may have to explain the filing to a recruiter. The discharge process offers stability, which many service members find outweighs the drawbacks.

About Michael J. Thompson, Attorney at Law

Michael J. Thompson, Attorney at Law, has proudly represented service members, veterans, and their families throughout Kentucky who have been financially distressed. As a former military serviceman and an experienced bankruptcy attorney, Michael J. Thompson knows military bankruptcy laws and knows what you’re going through. He has the practical experience and the solutions to help.

We understand the local court system, including the U.S. Bankruptcy Court for the Western District of Kentucky in Owensboro, Kentucky. We have served those at Fort Campbell and Fort Knox and have worked with individuals who have recently been separated from military service. Our team works to restore your financial stability while preserving your dignity. We provide essential bankruptcy legal support.

FAQs

Q: How Does Bankruptcy Affect the Military?

A: Your filing for bankruptcy doesn’t affect the military itself. It also does not automatically hurt your military career. However, it can raise a few red flags in terms of clearance. The military typically assesses your entire financial situation. In many ways, filing can look positive as opposed to piling delinquent debt. This allows you to avoid missed payments and legal action against you.

Q: What Debts Cannot Be Discharged During Bankruptcy?

A: Some debts are not dischargeable. Child support, alimony, most student loans, recent taxes, and criminal fines or restitution generally can’t be discharged. Other debts, such as court judgments for fraud, may also be non-dischargeable. Hire a military bankruptcy lawyer to determine what debts can and can’t be discharged. A lawyer can look at the specifics of your finances and help you determine what is dischargeable.

Q: What Is the Most Common Chapter of Bankruptcy Filed?

A: Chapter 7 is the most common chapter of bankruptcy that is filed. Chapter 7 is commonly used by those who want to start over and have little to no income to make payments. Chapter 13 filings are also frequent and typically involve individuals who are behind on their mortgage or car payments and would like to keep their home or car.

Q: Can You Be Dismissed From the Military for Filing Bankruptcy?

A: Filing for bankruptcy does not automatically mean you will be dismissed from the military. However, if your financial situation impacts your job performance or becomes linked to misconduct, it may become an issue, such as resorting to theft to pay bills. The military is less concerned with whether you file than with how you handle your finances. Bankruptcy often proves beneficial as it helps to stabilize your situation while safeguarding your career.

Hire a Military Bankruptcy Lawyer

If you are a service member or veteran in debt, you do not have to handle it alone. Contact Michael J. Thompson, Attorney at Law, today for your free consultation. We can help you regain control of your finances and secure your future. Our team provides legal assistance in your area while understanding the military lifestyle.