Military service members and their families make many sacrifices to protect the values and people of the United States.
Most service members do not expect one of those sacrifices to be financial security. And yet, many military families report that debt and financial challenges are one of the largest concerns they face.
What financial issues do military members face?
Last year, CNBC reported that:
- Nine in ten active service members worried about their finances; and
- Military families are twice as likely to be unable to pay bills on time.
Part of the reason for these financial challenges, the families report, is the frequent moving required of military families. Moving around the country – and perhaps around the world – can be a significant financial strain on families.
This is partly what causes military families to hold more debt than civilian families, with roughly 27% of military service members holding nearly $10,000 in credit card debt. Meanwhile, only 16% of civilians hold that much debt.
Federal laws do protect military families facing financial challenges
It is critical to note that military members – both active-duty members, reservists and veterans – can file bankruptcy to achieve debt relief. Significant debt or bad debt can put some service members’ security clearance at risk, so it is critical to manage debt effectively.
Even so, bankruptcy is still an option for service members.
Service members considering bankruptcy should know about the protections they have under the Servicemembers Civil Relief Act of 2003 (SCRA). The SCRA protects active military service members and their families before and during bankruptcy proceedings by preventing or postponing:
- Default judgments on debt collection;
- Eviction or foreclosure;
- Repossession of their vehicle;
- Civil court proceedings; and
- Wage garnishments.
Dealing with debt on top of deployment can be incredibly stressful, but service members have options when it comes to finding debt relief.
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