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Bankruptcy for Veterans



As a veteran of the armed forces of the United States, you are entitled to certain privileges and protections. Some of these rights are contained in the Servicemembers Civil Relief Act (SCRA), which is codified at 50 U.S.C. Sections 501 and further sections.

A Stay of Actions for Personnel Serving in the Armed Forces

The first part of the SCRA protects military personnel from having default judgments executed against them while they are in service of our country. This occurs when a complaint has been filed and served. Default judgments cannot be taken against service members unless strict procedures have been taken to ensure fairness to servicemembers. Even where it can be shown that a servicemember did receive notice of a lawsuit, the SCRA allows the lawsuit to be stayed, either on the request of the servicemember or by the court itself. The stay lasts for at least 90 days and allows servicemembers sufficient time to provide the court with proof of their tour of duty and to ensure that court proceedings do not occur in their absence. Finally the court can stay even final judgments against a servicemember if the court finds that a servicemember's ability to comply with a judgment is materially affected by military service.

Effect on Bankruptcy Proceedings

The SCRA applies to all proceedings in bankruptcy court. For example, anyone trying to obtain a default judgment against anyone in bankruptcy court must sign an affidavit, which is a sworn statement, promising that the person whom the judgment is being taken against is not a servicemember. All the other provisions of the SCRA apply in bankruptcy court as well. Servicemembers are allowed to stay proceedings and even court orders and final judgments if they can show that their ability to comply with any bankruptcy court order is materially affected by military service.

If you are a servicemember and are about to be employed overseas, you should be aware of the rights granted to you by the SCRA. If you believe that litigation has been filed or is likely to be filed against you in your absence, you should consult with an experienced bankruptcy attorney to make sure that your rights are protected.