Military Bankruptcy Stats: How Many U.S. Service Members File Each Year?

If you’re a service member struggling with debt, you’re not alone. Many military families, like yours, face bankruptcy due to a variety of unique reasons and circumstances. From family illness to frequent relocation, financial problems can quickly spiral, leaving you uncertain of what to do next.

When your back is up against the wall and creditors are hounding you, call Convenient Bankruptcy. Our Oklahoma bankruptcy attorneys will help you through the process. We’ll evaluate your options together, so you can make the decision that is best for you, your family, and your military career.

The Hard Numbers: Military Bankruptcy Rates

The three main causes of bankruptcy are divorce, severe illness, and job loss. Most financial problems are “unavoidable, unexpected, or too late to reverse” rather than signs of personal failure.

The Department of Defense acknowledges your right under federal law to use bankruptcy to resolve financial difficulties. Military leadership understands that financial stress can affect job performance and readiness.

One study shows that 1.2% of active-duty military members declared bankruptcy in a single year. This 1.2% rate translates to approximately 16,000 active-duty personnel filing for bankruptcy annually out of 1.3 million service members surveyed. To put this into perspective, current estimates suggest that approximately 10% of the roughly 750,000 Americans who file for bankruptcy each year are active-duty military members.

Unfortunately, it’s been years since the Department of Defense last conducted a bankruptcy survey. This data gap makes it difficult to track the current trends accurately.

How Military Bankruptcy Compares to Civilian Rates

In recent years, total U.S. bankruptcy filings have increased 14% – from 452,990 cases in 2023 to 517,308 in 2024.

While we lack current military-specific statistics, the overall trend suggests financial stress affects both civilian and military families. The key difference is that service members face unique financial pressures that civilians don’t experience.

Common Reasons Service Members File Bankruptcy

Military families face several financial challenges that can lead to bankruptcy:

• Frequent relocations: Moving often creates unexpected moving expenses that exceed reimbursements. Even with military allowances, the cost of relocating families to new duty stations can quickly accumulate.
• Deployment expenses: These can strain family budgets. While deployed service members receive special pay, families often face increased expenses managing households alone.
• Medical costs: Medical care affects military families despite TRICARE coverage. Emergency situations or specialized care not fully covered can create substantial debt.
• Credit card debt: To make ends meet, many military families resort to credit cards during financial transitions or in times of emergency. Military-focused lenders sometimes use aggressive collection practices that can escalate problems.
• Security clearance pressure: Worries about losing security clearance can prevent service members from addressing financial issues early, fearing career consequences.

Chapter 7 vs. Chapter 13 for Military Members

Military personnel have the same bankruptcy options as civilians, but with some special protections.

Chapter 7 Benefits for Service Members

• Faster debt elimination (typically 3-4 months)
• No payment plans required
• Special exemptions for disabled veterans rated 30% or higher
• No means test required for certain National Guard and Reserve members

Chapter 13 Advantages

• Keep all assets while making payments
• Structured repayment over 3-5 years
• Protection from creditors during the payment period
• Better for high-income service members

Special Protections Under Military Law

The Servicemembers Civil Relief Act (SCRA)

The SCRA provides active-duty military members with legal protections in civil actions, including the right for courts to stay or postpone bankruptcy proceedings. These protections are separate from and additional to standard bankruptcy protections.

Security Clearance Concerns

Filing for bankruptcy alone is not a disqualifier for retaining or receiving a security clearance. In fact, an individual who is delinquent on debt has a greater risk of losing their clearance than someone who files bankruptcy to eliminate debt.

The military recognizes that unresolved financial problems create security risks. A properly handled bankruptcy can actually protect your security clearance by demonstrating responsible debt management.

Contact Our Oklahoma Bankruptcy Lawyers Today

Military bankruptcy cases involve unique considerations that general bankruptcy lawyers may not understand. Don’t let financial stress affect your military career or family life. If you’re struggling with debt, bankruptcy might provide the fresh start you need. And with the right law firm on your side, you can protect your service record and security clearance.

At Convenient Bankruptcy, we understand the unique challenges military families face. Our experienced team knows how to handle military-specific issues while providing the debt relief you need.

Ready to explore your options?

Contact Convenient Bankruptcy today for a consultation. Call our law firm at (405) 639-2099 to help you understand your rights and guide you toward the best path forward for your family’s financial future.