Will Bankruptcy Affect My Ability to Enlist in the Military?

Your bankruptcy, by itself, won't preclude enlistment in the military. But negative financial circumstances might.

In order to join the military, you must meet certain financial standards. If you've got a bankruptcy in your past, this, by itself, will not prevent you from joining the military. However, the circumstances underlying your bankruptcy filing might cause the military to look with disfavor on your situation. On the flip side, in some situations, a bankruptcy might make someone a stronger military candidate.

Read on to learn why the military cares about your finances, what types of things the military is on the lookout for, and how the circumstances underlying your bankruptcy might hurt or help you enlistment application.

Your Finances Matter in the Military

The Department of Defense requires that “members of the Military Services are expected to pay their just financial obligations in a proper and timely manner.” To that end, each branch of the military has its own recruitment criteria that will take your financial background into consideration.

Why does the military care about your finances? The military wants to find out if you are responsible, reliable and trustworthy, and it believes that your financial background is in indicator of these personality traits. It also wants to make sure that you can live on a military salary.

Financial Eligibility

At some point during the recruitment process, the military will review your financial background. You may have to fill out an application for a Financial Eligibility Determination (FED). Some branches of service have stricter standards than others, and not all of them require you to fill out a form FED. During the FED process, or as a separate review, the military will examine your financial circumstances -- including your credit history and current ability to pay your debts and support yourself and your family.

Some of the factors that the military might view as a negative when considering your approval for enlistment include:

  • passing bad checks
  • repossessions or foreclosures
  • frivolous or irresponsible credit card spending
  • loan fraud, income tax evasion, embezzlement, or other potentially criminal financial conduct
  • charge offs, and
  • signs that you are living beyond your means, such as a high debt-to-income ratio.

How Bankruptcy Might Matter

It's not so much the bankruptcy itself that matters, but what it says about your financial circumstances and your character. Some bankruptcies may reflect negatively on the applicant, others may not.

Circumstances Surrounding Bankruptcy That Might Hurt Your Application

If the circumstances of your bankruptcy were less-than-honorable, then it may be a negative factor. Some potentially damaging bankruptcy issues may include:

  • you filed for bankruptcy multiple times
  • you discharged certain types of debts, such as gambling debts, taxes, or debts for luxury items
  • the court denied your discharge or dismissed your bankruptcy case, or
  • you relapsed into bad financial behavior post-bankruptcy, such as incurring payment delinquencies or a high debt-to-income ratio.

How much these negative financial factors will impact your application often depends on the type of position you are applying for and whether you'll need a security clearance

When Bankruptcy Might Make You a Stronger Applicant

Often, bankruptcy enables people to improve their credit histories more quickly. Struggling to pay debt that you can't afford can mean years of delinquencies and negative items on your credit report. By eliminating debts through bankruptcy, you can begin building positive payment history and improve your debt-to-income ratio. If bankruptcy has helped you get your finances under control, you may end up being a stronger military applicant in the long run.

The military may also view your post-bankruptcy financial rehabilitation as a good thing. It shows that you were able to solve your financial problems and are capable of self-improvement.

How to Present Your Bankruptcy in the Most Favorable Light

If you filed bankruptcy in the past, use it to your advantage when you apply to enlist in the military. Explain to your recruiter and in the FED application, if applicable, the circumstances that caused you to file bankruptcy, especially if they were beyond your control (such as unemployment, divorce, death, or illness). If the circumstances were within your control, explain why they will not happen again. Most important, make clear that your past financial problems will not impact your service in the military.

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