Filing bankruptcy in the Sunshine State can be tough for anyone—but if you’re a veteran or active-duty military, it can feel even more complicated.
The upside is that both Florida and the U.S. have protections in place to help veterans and servicemembers facing financial challenges. These laws exist to recognize the sacrifices you’ve made—and to help prevent you from being burdened with unnecessary financial struggles.
The problem is many veterans don’t know about these protections, and it’s not something that always gets brought up in conversations with financial advisors or attorneys—even bankruptcy lawyers.
So today, let’s look into some of the key protections you have, so you know what’s available in case you’re considering filing bankruptcy.
Remember: Bankruptcy can be a great tool in the right situations—it’s available for a reason. It never hurts to know what’s out there in case you ever need a little assistance.
Servicemembers Civil Relief Act (SCRA)
The Servicemembers Civil Relief Act (SCRA) is a federal law specifically intended to ease the financial burdens on active-duty military personnel. The SCRA applies to debts incurred before entering active service, and offers some unique protections that can make a big difference for someone who is juggling the stresses of military life while facing financial troubles.
One important provision is the cap on interest rates. Under the SCRA, interest rates on debts, such as credit cards or personal loans, can be capped at 6% while you’re on active duty. This cap only applies to debts incurred before entering service, but it’s a valuable tool that can help active-duty military members keep their finances more manageable while they focus on their service duties.
The SCRA also provides protections against foreclosure and eviction during active service. If you’re in danger of losing your home, the SCRA gives you the ability to put a pause on foreclosure actions or evictions. The idea is to make sure that while you’re serving your country, you aren’t also at risk of losing your home or other essential possessions
These protections extend to bankruptcy filings as well, giving military members some breathing room when navigating these tough decisions.
Disabled Veterans’ Exemptions
For disabled veterans, filing for bankruptcy can be a bit more straightforward compared to the civilian population—thanks to disabled veterans’ exemptions. If you’re a veteran with a disability rating from the Department of Veterans Affairs (VA), you might be exempt from the means test when filing for Chapter 7 bankruptcy. The means test is typically required to ensure that those filing for Chapter 7 truly cannot afford to pay back their debts. However, disabled veterans whose debts are primarily incurred during service, or those who have a disability rating of at least 30%, may bypass this test altogether.
This exemption is critical because it means that disabled veterans may be able to file for Chapter 7 without needing to go through the sometimes arduous process of proving their financial hardship. The exemption simplifies the process, offering some relief from the overwhelming red tape that many bankruptcy cases entail. But, it’s important to note that this isn’t automatic—you’ll need to be aware of this protection and may need to bring it up with your attorney if they haven’t already mentioned it.
VA Disability Benefits Protections
If you receive disability compensation from the VA, you should know that those funds are typically protected in bankruptcy. Creditors cannot seize these benefits to pay off your debts. This protection is crucial because VA disability compensation is often one of the few sources of income that veterans rely on post-service. Losing that income would be catastrophic, especially when medical bills or other financial obligations are piling up.
In most bankruptcy cases, VA disability payments are considered exempt assets, meaning that they’re shielded from the bankruptcy estate. Whether you’re filing for Chapter 7 or Chapter 13, the courts and creditors will typically not be able to touch your disability payments. Again, this is something you should confirm with your bankruptcy attorney to ensure they’re fully aware of these protections—because while they should know this, it’s always best to make sure your unique situation is fully understood.
Additional Florida Exemptions for Veterans
In addition to federal protections, Florida has its own state-specific exemptions that could impact your bankruptcy case. Florida’s homestead exemption, for example, is one of the most generous in the country and allows you to protect your home from creditors, regardless of its value, as long as you’ve lived there for the required amount of time. This is particularly helpful for veterans, as many own homes and may be concerned about losing them during bankruptcy.
Florida law also allows for a personal property exemption, which can help protect certain assets from being liquidated in bankruptcy. For veterans, these state protections can act as a second layer of financial security in addition to federal protections. Your lawyer should always evaluate whether state exemptions can provide added relief on top of the protections afforded to you by federal law.
Why It’s Important to Find a Bankruptcy Attorney Who Understands Your Needs
Dealing with bankruptcy is stressful enough, and if you’re a veteran or active-duty servicemember, it can feel even more complicated with all the extra rules and protections involved. You deserve an attorney who truly gets the ins and outs of these protections. A lot of veterans don’t even realize they have certain rights, and sadly, not every Florida lawyer may know about them either.
It’s important to work with someone who will take the time to understand your service history and how it affects your financial situation.
Veterans and servicemembers have specific protections under federal laws, like the Servicemembers Civil Relief Act, and state laws in places like Florida that can offer extra exemptions. These can really help when you’re in a tough financial spot, but they’re not always front and center, even with some professionals. If you’re facing bankruptcy, make sure you find a lawyer who knows how to use these protections to your advantage. It can make a huge difference in how smoothly things go—and what your financial future looks like afterward.
One of the unique challenges for military members and veterans in financial distress is the impact of deployment, relocation, and extended time away from home. These factors often make it difficult to manage everyday financial obligations—leading to late payments, increasing debt, or even foreclosure risks. The frequent moves and varying duty stations can also complicate housing arrangements, potentially triggering legal issues around mortgages or leases that an attorney unfamiliar with military life may overlook. An attorney who understands your background will factor these complexities into your bankruptcy strategy, ensuring the protections you deserve are properly used.
Additionally, certain debts or benefits, such as VA disability payments, are treated differently in bankruptcy cases. Without the right expertise, these protections may not be fully enforced, leaving veterans or servicemembers at risk of losing benefits or property they are entitled to.
FAQ
Q: What types of bankruptcy are available for veterans and active-duty military personnel?
Veterans and active-duty servicemembers can file for Chapter 7 or Chapter 13 bankruptcy, depending on their financial situation.
- Chapter 7 is typically for those who cannot repay their debts and involves liquidating non-exempt assets to pay creditors.
- Chapter 13 allows individuals with regular income to create a repayment plan over three to five years.
Veterans with certain disabilities may be exempt from the means test for Chapter 7, making it easier to file.
Q: Are VA disability payments protected in bankruptcy?
Yes, VA disability payments are generally protected in bankruptcy. These funds are considered exempt assets, meaning creditors cannot claim them to pay off your debts. This is an important safeguard to ensure that veterans do not lose the benefits they rely on to cover essential living expenses.
Q: What is the disabled veterans’ exemption for bankruptcy?
Veterans who have a VA disability rating of at least 30% or whose debts were incurred primarily during their service may be exempt from the means test when filing for Chapter 7 bankruptcy. This exemption streamlines the bankruptcy process, allowing disabled veterans to file without proving their inability to pay.
Q: Can bankruptcy discharge student loan debt for veterans?
In most cases, student loan debt is not discharged through bankruptcy. However, if you can prove that repaying the loans would cause undue hardship, it may be possible to discharge them in rare cases. Veterans with service-connected disabilities may also be eligible for a discharge of federal student loans outside of bankruptcy through the Total and Permanent Disability (TPD) discharge program.
Q. Can filing for bankruptcy stop foreclosure on my home?
Yes, filing for bankruptcy can temporarily stop foreclosure proceedings through an automatic stay. The SCRA provides additional protections for active-duty military members, which can further delay foreclosure actions. In Florida, the state’s generous homestead exemption may allow you to protect your home in bankruptcy, even if it has significant equity.
Q: What happens to my military pension in bankruptcy?
Military pensions are typically protected in bankruptcy under federal and state exemptions. This means that creditors cannot touch your military retirement benefits during the bankruptcy process.
Filing Bankruptcy for Florida Veterans & Active-Duty Military
If this all feels overwhelming, know that you’re not in it alone. These laws are there to protect you, not to make things harder. And as you take that next step, know that you’re not alone—there are people who understand what you’re going through and can guide you through this complicated process with expertise and personal attention.
The Independence Law Firm
At The Independence Law Firm, we understand that every financial situation is different, especially for veterans and military personnel. Whether you’re considering filing for bankruptcy on your own or with a spouse, our firm recognizes the unique challenges you face. We’re here to provide you with personalized guidance and we’ll stand by your side through every step of the process to help you protect what matters most.
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“Brian did an outstanding job with my bankruptcy. He told me everything that would happen. I was not surprised by anything. I would recommend him and his staff.”
“Attorney Brian Miller was extremely excellent he helped me with my case. He gave us his time to listen to us and he explained the whole process in detail and was knowledgeable and was a man of his word. Highly recommended”
If you’re ready to take the next step toward financial stability, reach out to The Independence Law Firm. You can call us at (813) 642-4863 or click here to schedule a consultation for an in-person or Zoom meeting—whichever works best for you.
Disclaimer: The information presented in this article and across this website is presented for general educational purposes only. Although this article discusses legal issues, it is not legal advice. Please be aware that laws and the content of any linked websites or pages might have evolved since the publication of this article, and as such, we cannot guarantee the ongoing accuracy of any presented information. Utilizing this article does not establish an attorney-client relationship.
