Special Financial Rules and Benefits for U.S. Veterans


Active service members as well as U.S. Veterans experience the same financial struggles felt by the rest of America. However, there are several rules that apply specifically to US service members and Veterans when it comes to their finances. It’s important to know your options if you’re a former (or current) service member who is under a great deal of financial strain.

If you’ve got debt piling up that you just can’t make a dent in and your monthly bills are also going unpaid, it may be time to think about filing for bankruptcy.

In order to file for bankruptcy, everyone must pass the bankruptcy means test. Normally, military income, including VA benefits, would be included in your means test assessment. HOWEVER, New Jersey is a state that uses the federal bankruptcy exemption system. This means that your Veterans benefits would be exempt from the means test (not included), which will give you a much better chance at being approved for bankruptcy.

Disabled Veterans do not even have to pass the means test as long as most of the debts in question occurred while you were on active duty or while you were performing homeland defense duties.

In order to be considered a ‘disabled Veteran‘ according to bankruptcy court, you would have been relieved of your active duty status due to the disability occurring or exacerbating while on active duty. For the sake of the bankruptcy means test, to qualify as being in ‘active duty,’ you would have been a full-time military member.

National Guard members or Reservists may also be exempt from the means test required for bankruptcy approval, but the National Guard and Reservists Debt Relief Act of 2008 is about to expire, so check with your bankruptcy attorney to be sure about the requirements you’ll need to meet.

In addition to the special rules and exemptions afforded to Veterans regarding bankruptcy and the means test, the Service member’s Civil Relief Act (SCRA) protects those military members who are actively deployed. The SCRA works to postpone a number of obligations in order to allow members of the armed forces to focus on their military duty.

As an active member of the armed forces, the SCRA temporarily protects you against: trial, taxes, credit card debt, eviction by landlord, and outstanding mortgage payments. This is very good news for spouses and family members of deployed service members, as it protects them from losing their home while they (or their spouse) is on active duty.

Veterans and active service members who do end up filing for bankruptcy will notice a hefty drop in their credit score, just like anyone else who files for bankruptcy. The good news about filing as a Veteran or service member is that you will likely be eligible to take out a VA loan in as little as 12 months from your filing date (assuming you’ve been paying your bills on time since the bankruptcy). This can help you on the path to righting your finances and living situation.

If you are a U.S. Veteran or are currently active in the U.S. armed forces, please reach out to our New Jersey bankruptcy law firm for a free consultation. We want you to know today, as well as every other day, that we appreciate your service for our country. Now, let us help you get your finances back on track!

Image credit: US Army Africa


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: