Recently on our bankruptcy forum a user asked, “I am considering joining the army. I am in a desperate financial situation. Not only do I have $20,000 in credit card debts I have a car I cannot afford and $50,000 in medical bills. I have wanted to be in the military my whole life. Will filing bankruptcy hurt my chances?”
Bankruptcy and the military
Many people file for bankruptcy protection without fully considering the short and long-term ramifications of their decision. Although filing for bankruptcy is very common, it can affect your ability to purchase a house or car, get credit, and in some cases, to find employment within the armed services.
Specifically, the Department of Defense states that “members of the Military Services are expected to pay their just financial obligations in a proper and timely manner.” Each branch of service, however, applies this principle a bit differently.
For example, the Air Force uses the “40 percent rule,” which does not recruit individuals who have monthly consumer debts which exceed 40% or more of their anticipated military pay. Exceptions are made, however, for debts which can be deferred, including student loans.
To that end, before determining whether you are fit to serve in the military the government will review your financial situation, including whether or not you have consistently paid your bills and managed your finances in a responsible manner, Some branches of service may also require some type of interview to evaluate your financial status.
What issues can hurt my chance for military enlistment?
There are a variety of financial issues that the military may review prior to allowing you to enlist. For example, the military may review if you have any of the following:
- Unpaid loans which are overdue or in collections
- A history of bad credit
- A history of bankruptcy filings
- Overdue child support payments
- Overdue spousal support payments
- Unpaid tax debts
- A history of writing bad checks
- A history of property repossessions
- Loan fraud or tax evasion
- A criminal record for embezzlement
- A history of criminal financial misconduct
- Consistently high debt to income ratios
Filed bankruptcy in the past will this eliminate my chances for recruitment?
If you have filed for bankruptcy protection in the past this fact by itself will not eliminate your chance for recruitment. The military will likely review your reason for filing and make a determination.
For example, if you became seriously ill and generated $100,000 of medical debt and had to file for bankruptcy this might be viewed differently than if you had excessive credit card debts purchasing unnecessary luxury goods or because you simply lived above your means.
The general concern, especially if you are seeking employment where you may need a high degree of security clearance, is that individuals who have a history of bad financial decisions could be desperate for money, a situation which could lead a recruit to be more easily bribed or more vulnerable to making bad decisions.
With this in mind, if your bankruptcy is or was the result of unforeseen circumstances such as unemployment, divorce, death, or illness it might be easier to convince the military that you are financially responsible and can live within your means in the future. If, however, you have consistently made poor financial decisions the military may decide you are too great of a security risk.
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