If you are thinking of lodging a bankruptcy claim, you are right to wonder how this will affect your military retirement pay and any lump sum investment you have made.
After serving your country for numerous years in grueling and challenging ways often unappreciated by civilians, or even unable to be told to civilians, you no doubt feel that you have earned brass razoo of your military retirement pay.
While receiving your military retirement pay, and after reaching the age where your super comes available, you may choose to make a lump sum investment to produce income in addition to your military retirement pay.
Should an unforeseeable calamity arise and through unavoidable circumstances you fall liable to debt which you cannot repay, you may be faced with having to file a bankruptcy claim. How does the making a bankruptcy claim affect your military retirement pay and your lump sum investment?
Before filing a bankruptcy claim, there are several points you may wish to consider.
If you make a bankruptcy claim, your financial record will be forever tarnished. Doubtless you have been asked in the past “Have you ever filed for bankruptcy” or equivalent. A bankruptcy claim may be a way to wipe the slate clean over a few years, but making the bankruptcy claim may affect further investment choices by limiting credit availability. Also, a bankruptcy claim is frowned upon when applying for a mortgage, even with regular military retirement pay and any lump sum investment you are able to retain.
If you make a bankruptcy claim, you may lose control of your military retirement pay and your lump sum investment may be used to repay the debt. Factors which come into play here are the amount of military retirement pay you receive and also the size of your lump sum investment. If your military retirement pay is deemed sufficient in itself, your lump sum investment may be seized to repay your debt. If your military retirement pay is not sufficient for a basic lifestyle in itself, income from part or all of your lump sum investment may be deemed necessary to provide necessary basic income.
In any event, being in the position to think about a bankruptcy claim is one where you should seek financial and legal advice. While your military retirement pay may survive the bankruptcy period, your lump sum investment may not.
Make sure that you have evaluated all other options before risking loss of control of your military retirement pay and lump sum investment after filing a bankruptcy claim.
