Anyone who is serving in the military needs to be aware of how debt can negatively affect their military career. Most people by now should understand that the military will pull a credit report on anyone who is applying for a security clearance, and that the security clearance can be denied if the person is carrying too high of a debt load. If your MOS (job) depends on obtaining that clearance and it is denied, you could be involuntarily reclassed into a different job that doesn’t require a clearance… hope you like cooking if that is your situation!
What some don’t know is that you can actually be discharged from the military for too much debt. I saw it happen to a Desert Storm vet back when I was a private in 1999. Once the commander got the letter of indebtedness, and it was determined the soldier couldn’t pay it, they proceeded to revoke his security clearance for it. Since our MOS required a Secret level clearance, he had the choice of being involuntarily reclassed or separated under Article 134 of the Uniform Code of Military Justice (UCMJ). He chose separation over becoming a cook.
Years later, as a sergeant I had to write one of my soldiers up for being in debt that he couldn’t pay. I had to take him to budgeting class, since the bad debt was a repossessed car, and he ended up with extra duty and and a repayment plan drafted up by our commander.
Anyone who has ever served knows that the military pay is less than generous when compared to the civilian equivalent. So it becomes imperative to operate your household on a budget in light of the negative consequences of debt! Here is the excerpt of Article 134 that the specialist was discharged under, and that I wrote up my soldier for:
Article 134 – (Debt, dishonorably failing to pay)
Elements.
(1) That the accused was indebted to a certain person or entity in a certain sum;
(2) That this debt became due and payable on or about a certain date;
(3) That while the debt was still due and payable the accused dishonorably failed to pay this debt; and
(4) That, under the circumstances, the conduct of the accused was to the prejudice of good order and discipline in the armed forces or was of a nature to bring discredit upon the armed forces.
Explanation. More than negligence in nonpayment is necessary. The failure to pay must be characterized by deceit, evasion, false promises, or other distinctly culpable circumstances indicating a deliberate nonpayment or grossly indifferent attitude to-ward one’s just obligations. For a debt to form the basis of this offense, the accused must not have had a defense, or an equivalent offset or counterclaim, either in fact or according to the accused’s belief, at the time alleged. The offense should not be charged if there was a genuine dispute between the parties as to the facts or law relating to the debt which would affect the obligation of the accused to pay. The offense is not committed if the creditor or creditors involved are satisfied with the conduct of the debtor with respect to payment. The length of the period of nonpayment and any denial of indebtedness which the accused may have made may tend to prove that the accused’s conduct was dishonorable, but the court-martial may convict only if it finds from all of the evidence that the conduct was in fact dishonorable.
Lesser included offenses. None.
Maximum punishment. Bad-conduct discharge, forfeiture of all pay and allowances, and confinement for 6 months.
As you can see, excessive debt can have a severe impact on your career. It will also have a negative impact on your personal life.
This is a guest post from Ana, the author of the blog Debt-Free Revolution. Ana is “an Army wife, an Iraq veteran, a college student, a mom, family CFO, and a “Pizza Delivery Expert” a.k.a. a Domino’s pizza delivery driver to get her family out of the chain of debt!”
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{ 30 comments… read them below or add one }
I had no idea! One more reason not to go into debt!
Lynnae,
The military takes the actions of its members very seriously, and poor financial health is not only a bad reflection on the military, but it can hinder operational readiness as well.
Personal financial problems can get in the way of deployments and troop movements, because the military will not usually send someone where they are needed if there is legal action against them.
Great post. I knew it’s tough, but I didn’t know it can be this hard/harsh.
Hi Pinyo,
Punishment and getting kicked out of the military is really a worst case scenario. Most supervisors and military leaders try to work with their troops before disciplinary action is taken. However, sometimes the situation is just too far out of control to be dealt with.
The military does try to provide education and financial training, but in my opinion, it is limited at best.
According to the post excessive debt is punishable by UCMJ but what if the debt was caused by entering military service. If the situation is to far out of control and you make every effort to pay is it still considered dishonorable and subject to discharge?
Mario, Yes, excessive debt is still punishable by the UCMJ, even if it was caused by your entering into military service. The best recommendation I can give you is to try to get on top of things as soon as possible. If you aren’t able to cover your debts, I would begin talking with your supervisor and First Sergeant ASAP. The sooner you get them involved, the more willing they will be to work with your situation. Good luck, and thanks for serving.
I work at a bank in the loan dept.,and I have a customer who took out a loan to purchase a vehicle. He stopped paying for the vehicle and it was reposessed. I tried to explain to him the remaining balance after the vehicle was sold. At first he pretended to have interest in the repayment to make good with the bank. Now he flat out refuses to repay the loan saying that he feels he shouldnt have to pay this back. After looking over his file, I found out he was in the U.S Army. He completely refuses to cooperate and now he doesnt even answer his phone, Im guessing he is screening his calls to avoid discussing his bill.
Is there any way to find out who his supervisor or commanding officer is if they are refusing to put forth efforts in repayment of funds borrowed. What would be the best way to report this kind of negative behavior? to whom would this be of concern?
Thank you
Nick
Nick,
I would start by sending a certified letter to him to have that on file and inform him he is legally responsible for the remaining balance of the loan and this is negatively affecting his credit (though I’m sure this has been done). You may also let him know that if he doesn’t comply you will bring this to the attention of base authorities. Keep in mind, his commander can order him to pay it, but I’m not sure he can legally force him to pay it. But the commander can enforce military punishment, which may concince the soldier to pay.
On his loan paperwork, check to see it he listed his unit, brigade, or any other information regarding which organization he is in. If he did, go on the internet and find the number to that unit’s First Sergeant or commanding officer and give them a call (start with the First Sergeant).
As I mentioned, this won’t guarantee results, but it will get you in the right direction. Good luck.
Unfortunately I am faced with Marines unable to pay debt on if not a daily at least a monthly basis. In my 13 years I have had 2 Marines both grossly in debt. One consistently used multiple check cashing (pay day advance) places and would be overdrawn on his account 2 days after payday and the other constantly just overdrafts his account in excess of $400 dollars between paychecks. I did all I could for these guys to include taking care of their finances for them. Hopefully they have gotten better and can become productive citizens once they are out.
Just correcting one fact in your narrative…
There is no such thing as being “separated under Article 134 (UCMJ)”. Article 134 is the general punitive article in the MCM, Manual for Courts-Martial. It is used in Article 15s.
You’re thinking of when a Soldier is chaptered out of the military, or Administratively Separated. If the Soldier has enough misconduct, i.e. they have failed to repay SEVERAL debts and have established a pattern of doing so no matter what the unit did to help them, then they could be chaptered under Chapter 14-12(b): Pattern of Misconduct. This is out of AR 635-200, Administrative Separations.
Thanks for the correction, Jagdog.
Im looking to join the military and i an still paying my car loan off. i still owe around 5 grand. would that be ok if i joined and just continued to pay or would i have to pay that off first?
Matt, you don’t have to be debt free when you join the military, but you may not be able to join if you are in the process of a bankruptcy or other legal proceeding. The main issues the military has with debt come when the military members either choose not to pay their debts, or are simply not able to because they have too much debt. There shouldn’t be a problem joining the military when you have a car loan that is almost paid off.
Hi,
My husband is a CPO and is currently in NRD San Francisco as a recruiter. He pretty much abandoned me 6 mths ago, left with no avail. He left all debts, house, responsibilities. His main reason was that I never got along with his daughter. I was dumb founded after he left me so I searche for reasons why would he leave his life in LA. So I found out he has been lying to me. He has a mistress, I discovered emails. Then I saw pix on facebook with another woman. Then I found out he has an escort service accounts, browsing through adult websites. So he has not contacted me or anything about our debts. He felt kinda guilty and started giving me 500/mth..But we are in so much debt that it was not even enough. I lost our home, car, and now I’m being sued for our debts. I just want to know if I can take legal action against him? Who should I contact?
hi i just have a question, my husband is in the army. and he owes money from a relative. now they were trying to contact my husbands unit to get it over with, but for now we are in financial trouble because the army is taking away money from us from an advance pay we owe. now can my husband get in trouble and get kicked out cz we cant pay there relatives in time? and he owes like 4G .. thanks
Mercy, your husband most likely won’t get kicked out of the military for being late on a loan – getting kicked out is usually reserved for the worst cases. but that doesn’t mean he will avoid any repercussions. My recommendation is to contact your husband’s family and work out a payment arrangement that will repay them the money your husband borrowed and still work with your bills. It’s good for his career and more importantly, it’s the right thing to do.
Not completely on topic, but kind of…
My son’s father owe’s child support to me (he is currently over $20K in arrears due to not paying until it was court ordered when our son was already 2 years old) and it has been taken directly from his military retirement pay…until this month. I just found out from DFAS that his pay is currently suspended, but they won’t tell me why since we are no longer married. Said it could be due to government debt, being unable to locate him (him never informing them of change of address), or many other things. What can I do? I need the money to pay for my son’s incidentals. There is an established court order requiring him to pay and that is how the deduction from pay began. If they have suspended his pay due to paying back other debts, shouldn’t the primary concern for the government be for the welfare of his child? Who should I contact? What should I do? I am so lost at this point…HELP!
My sister joined the Air Force six months ago and just completed boot camp and now 2 weeks ago she went to her base. She owes $100,000 in student loans. She called Wells Fargo to consolidate and she was told she would need a co-signer.I don’t know what to do, I’m 30 years old and I only make 27,000 a year, I have good credit but I barely get by. The problem is my sister told me if she doesn’t get it consolidated she will get kicked out of the Air force.Is this true?
Yazy, It’s tough to say whether or not you sister would get kicked out of the military for student loan debt. Debt issues must be extreme for a military member to be kicked out of the service and they are handled on a case by case basis. I cannot recommend cosigning on a loan because doing so also makes you responsible for the loan. Should your sister default on the loan, you would be legally liable for the rest of the loan, and $100,000 in debt would be crushing and could potentially damage your finances for decades (student loans cannot be relieved via bankruptcy). Here are some military student loan forgiveness programs which your sister may or may not be eligible for. She should also look into the Servicemembers Civil Relief Act which could potentially help her lower her interest rates on her student loans, and she should also investigate student loan deferment programs which may help ease the burden right now, though it will not eliminate the loans entirely.
Several years ago I went through a divorce and the agreement was that the home would go to my ex wife. I am still on the note but it is required that she make two attempts per year to re-finance. Now that she is moving and is having issues with the home she has stated to me that she is just going to let it go. It is going to greatly ruin my credit. The divorce decree does state that she is responsible for payments on the house and everything associated with it as it was awarded to her. Can her 1st Sgt or Commander enforce a garnishment of wages from her? This happened once before with one of the vehicles she was awarded and she refused to make payments and they enforced the payment. If so does anyone have any air force regulations associated with this?
Hi SAL, I don’t have a solid answer for you. I highly recommend getting a lawyer to work with you on this case, as it could have major implications on your credit and financial future. Best of luck.
My boyfriend , and I have discussed marriage seriously. However this was before now. He just started A school for Nukes, and we weren’t looking into getting married right this moment. We both wanted to finish school first, and every thing, but I’m worried if my debt from doctors bills, might effect his security clearance. I need to pay the debt any way, but should I rush this and ask for help from him and my parents? I mean would this actually kill our chances of getting married? I realize it’s my fault for letting this get as bad as it is, but I don’t want to have him lose out on a good finacialy stable job and life over my mistakes.
when i was younger i got my first bank card when i ran out of money i gave the card to my mother to hold for me until i got another job and could continue to put money in the account. She used my card mistakenly and ran up a few hundred dollars in overdraft fees. My account was subsequently closed out and I never got the oppotunity to pay the bank off before this happened. In total i would say i owe less then a 500 dollars and no collection agencies have ever been in contact with me. The only reason i even found out about this is because when i tryed to add money to the account the atm told my my account had been closed. I then proceeded to talk with the teller who told me i couldn’t reopen my account with there bank even if i were to pay them back for the full amount. Im worried that this will keep me from getting my security clearance for my mos in the army can you please give me your thoughts on the matter. thank you
Joseph, The military does a thorough background check, and one mark against your credit won’t necessarily prevent you from receiving a security clearance. The military is concerned with people whose finances are in such a poor condition that it is a red flag. For example, people who cannot afford to pay their bills each month might be more likely to sell state secrets so they can meet their bills. Just be truthful when filling out the questionnaire and in any interviews and see where it leads. Best of luck, and thanks for your service!
my husband is in the air force he has been in for 3 years now we were two months behind on are 07 dodge charger srt8 due to family illness and death. we contacted the bank to inform them we would pay them back with our tax return on feb 10.the bank came and picked it up on feb 25 , we had not yet received our taxes but made one full payment to them feb1.since they picked it up they plan to auction it in 10 days. of course we will have to pay the remaining balance we owe 25,150. my husband informed his first shirt of the issue, due to the bank not informing first shirt its not taken official yet. We are waiting for the auction to see what the remaining balance is. We plan to pay it and have 1000 saved to due so. we are very concerned though that with all the role backs that he will now be in hot water and may not pass his security clearance and wont be able to re-enlist. we are looking for advice
Amber, the best advice I can give you right now is to have your husband visit with his First Sergeant and try to set up some financial counseling for the two of you. Most bases offer something via the family center or MWR. Just having some debt isn’t always enough to deny a security clearance, even with a repossessed car or other bad mark on your credit. If your family is able to meet your remaining financial obligations and you are working on improving your finances, then those actions will go a long way toward being able to remain in the military. Right now the best thing you and your husband can do is begin working on ways to improve your finances.
How is it that a soldier can get away with not paying the full amount of child support, in which the court determined as fair based on the income of both parties? Are there any reprocussions that a soldier faces when he is over $10,000 behind in child support payments?
Damarise, if there is a court order, then the soldier is legally required to pay the amount. I recommend contacting the attorney who represented you in the initial proceedings. If the soldier is found to be in arrears, then it may be possible to have wages garnished or have an allotment set up which will automatically send the correct amount of money from the paycheck each month before it is sent to the military member. But in most cases you will need the soldier to either set this up voluntarily, or get a court order for it to happen.
I am on Navy DEP and will leave soon on July i filed bankruptcy this April due to failed business venture and bills/credit catch on us we basically living on paycheck to paycheck . I informed this to my recruiter my court date is on May an will wait to get discharged of all my debt. If i go to bootcamp will i be discharged eventjought i told my recruiter and put it in our records? My rating or job doesnt need security clearance. I am trying to fix this before i ship out.
Dre, having a bankruptcy doesn’t automatically preclude you from military service. If it is in your record, then you have done everything you can to make the military aware of your situation. Hopefully you will be able to start a fresh way of life in the military. Best of luck in your military career!