Why Do So Many Veterans Go Bankrupt?

While military veterans have paid an undeniable service to society, unfortunately they are much more likely to experience overwhelming credit card debt and other financial issues. The United States federal government makes efforts to help veterans, especially those who are disabled as a result of their military service. However, the increasing costs of living and the stress many active and retired military personnel experience can make a recipe for financial problems thats where the best bankruptcy attorneys steps in.

In past generations, some lenders took advantage of military members by issuing them loans at higher rates than they could afford. They would then try to coerce payment by threatening to get the borrower in trouble with his commanding officer. While federal laws severely restrict lenders from exploiting servicemen these days, some veterans may still have old “payday” loans, rent to own furniture bills or old auto loans they cannot pay. Even if the furniture or car was repossessed, a veteran could still legally owe the debt.

Unless a veteran has a great job or a healthy retirement plan, he will likely qualify for Chapter 7 bankruptcy. Chapter 7 is the most drastic but effective form of debt relief, as it permanently eliminates the veteran’s financial obligation to repay most debts. However, anyone filing Chapter 7 including a military service member cannot include some types of debt. Recent tax bills, child support, alimony, court fines or any debt related to a crime are ineligible for debt assistance. Most civilians are unable to include their federal government student loans in their cases unless a judge accepts a compelling circumstance such as severe disability or a college going out of business. Fortunately, it is easier for a veteran especially one who is disabled to receive forgiveness for government student loans.

Chapter 13 is another option for veterans who still have a decent income but just need a little help to get back on their financial feet. In Chapter 13, a court trustee supervises partial repayment of debts. It takes three to five years to finish a Chapter 13 plan, but during this time a debtor cannot get any new credit without a judge’s permission.

Filing either chapter is not a decision to take lightly. Chapter 7 damages a veteran’s credit rating for 10 years from the date of filing, while Chapter 13 harms his credit rating for seven years from the date of filing. However, it will provide a lot of financial relief once the necessary court processes are completed.