Many of our bankruptcy clients from Orange County communities such as Monroe and Warwick and Goshen are either (1) on active military duty, (2) are Department of Defense (“DOD”) employees, or (3) are retired from the military or DOD. As such, they frequently owe money on their Military Star Card, which is a credit card issued to military and DOD personnel by the Army and Air Force Exchange Service (“AAFES”). Due to the extensive collection powers possessed by the Military Star Card and AAFES outside of bankruptcy, our military and DOD clients frequently are unaware that such debts are easily dischargeable in either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, just like any other credit card.
Our active duty clients are frequently concerned about the effect that a bankruptcy filing will have on their status in the military. While it is true that failure to pay your debts can get you drummed out of the military, pursuant to Uniform Code of Military Justice Article 134, bankruptcy is a federal right that is available to all, including federal employees. The non-discriminatory language in Bankruptcy Code § 525(a) makes it clear that you cannot be kicked out of the military, or denied promotion, “solely” because of a bank ruptcy filing. The word “solely” looms large in the statute, but as long as you have no pending disciplinary or other issues with the military, our observation has been that your bankruptcy filing should not result in your termination from service or denial of promotion.