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Overview |
What to Look For |
What to Do |
What to Avoid
What to Expect |
Troubleshooting
Bankruptcy is a constitutionally guaranteed right that permits people (and businesses) to ask a court to find them officially unable to meet their debts. When the bankruptcy court grants the petition, the assets and liabilities of the person are administered by an impartial trustee for the benefit of the creditors, usually through sale and distribution of remaining assets. State and federal laws govern what the debtor may keep. In general, bankrupt people are allowed to keep a small equity in their home, an inexpensive automobile, and limited personal property. Historically, bankruptcy has been a last ditch effort to regain control of one's financial life. However, recent trends show a marked increase in the number of bankruptcies filed. Bankruptcy presents a unique problem for commands as it impinges on the Marine's trustworthiness and reliability to perform the mission.
The road to bankruptcy is usually paved by many financial missteps that culminate with a realization that one is no longer able to juggle finances that are out of control. Contributing factors may be a change in family income from a spouse who is no longer able to work, unexpected medical bills not covered by TRICARE, or other catastrophic changes that may make bankruptcy seem like the only option. Many times, the command's first knowledge of a Marine's financial situation may be questions from the Marine specifically asking about bankruptcy procedures and the potential career impact of filling bankruptcy.
- On going or worsening financial problems.
- Marked changes in Marine's family income.
- Overwhelming, unexpected expenses.
- Overuse or abuse of credit.
- Frequent calls from creditors.
- Behavioral changes (depression, anxiety, isolation).
- Questions about bankruptcy procedures and implications.
- Many times there is not a warning because the Marine has been able to cover-up financial problems.
In the case of bankruptcy special emphasis should be placed on formulating a recovery plan that changes or modifies the Marine's spending behaviors that led to the bankruptcy.
Communicating the possibility of career ramifications will create anxiety for the Marine who is considering bankruptcy or has filed bankruptcy. The negative subject of career sanctions cannot be avoided, but must be addressed as factually and objectively as possible. For example, if a Marine's access to classified information will be denied for a period of time, the command should also communicate in what way the Marine will remain a productive member of the unit. Additionally, denial of access to classified material is not loss of the security clearance and should not be communicated in that vein. Generally, this communication may be the first time the actual consequences of filing bankruptcy becomes evident.
- Immediate administrative or disciplinary action.
- Judgmental words and actions.
- Unnecessary sanctions related to bankruptcy.
As with financial problems, the command should concentrate on helping the Marine recover and remain a productive member of the Corps. Depending on the situation, bankruptcy may have been the appropriate response to the Marine's financial dilemma. Therefore, immediate administrative or disciplinary action should be avoided. The Marine may also be experiencing self-esteem problems related to the bankruptcy; judgmental words and actions will reinforce the Marine's low self-esteem and further degrade their personal readiness. Part of the recovery process is keeping the Marine productive and utilizing them to full potential. Evaluating reliability is absolutely necessary, so unnecessary career sanctions should be avoided, as they may impede the recovery process.
- Initial commitment to changing financial behavior.
- Continued contact from creditors until notification that bankruptcy has discharged the debt.
- Continued contact from creditors whose claims were not discharged under the bankruptcy.
- Disheartened Marine when impact of bankruptcy is fully realized.
The Marine is usually relieved at first. Much, if not all, of the debt has been relieved and their income now seems to be their own again. At this point the Marine is highly committed to remaining out of debt and will commit to financial planning to that end. However, notifications proceed slowly, so creditors whose debt against the Marine has been discharged may continue to contact the Marine and the unit. Having sufficient certified copies of the bankruptcy on hand to provide these agencies will help stop the contact. Depending on the circumstance, the court may not have discharged all debt; therefore, some creditors will still be contacting the Marine for payment. Addressing these creditors through a debt liquidation plan using income freed from paying debts that have been discharged should be part of the recovery plan. Finally, the Marine may become very disheartened with the situation when the full impact of the bankruptcy starts to affect their professional and personal life (i.e., career sanctions, poor credit rating, and inability to secure necessary credit).
Although with bankruptcy the Marine's debt has been relieved, the Marine must now face varying consequences based on the nature of the bankruptcy. For the Marine who filed bankruptcy as a financial necessity, these consequences may cause an increased stress level and despair as they try to recover a sense of financial stability. For the Marine who filed bankruptcy as an easy out to repaying debt, these consequences may increase the stress level due to disillusionment with the outcome of the bankruptcy process. Referral to helping agencies to refocus on recovery may help alleviate some of the stress. Follow-up by all agencies involved is critical to ensuring the Marine does not walk down the same road again.
- Some creditors
may not get paid and may continue to call the
command. As part of the recovery process, the goal should be coordinating realistic liquidation plans that will satisfy the creditor and improve the Marine's financial future.
- Marine
may face hurdles acquiring needed credit, to
include Government Travel Card. Command may need to intervene on the Marine's behalf to secure the necessary Government Travel Card.
- Marine may encounter hurdles in qualifying for rental properties and utilities account.
May require command action to place Marine in a priority category for on-base quarters.
- Suspension or loss of security clearance could impact Marine's ability to function in their MOS and affect their self-esteem. Command should articulate the factual career impact and the short and long term plans to retain the Marine as a productive member of the Corps.
- Marine reverts to spending and credit habits that led to the original bankruptcy. Reeducate and reinforce sound financial practices, reiterate the consequences of poor financial practices, to include the possibility of disciplinary actions that may go as far as administrative separation.
The full impact of the bankruptcy will not be realized until the Marine must transact some type of financial business. At this point, the Marine may find it impossible to secure any type of credit, loan agreement, rental agreement, etc., all of which, could pose serious challenges to personal and professional needs. The negative impact may cause the command extra work to help the Marine deal with travel issues and housing issues, possibly necessitating the need for priority placement into on-base quarters. Should the Marines security clearance be suspended or revoked, or access to classified material be withdrawn for a certain period, the command may need to address temporary duty for the Marine or retrain the Marine into another MOS if unable to continue performing in the present MOS. The command and helping agencies should be alert for signs the Marine is reverting to spending habits that led to the bankruptcy.
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