Bankruptcy and Military Re-enlistment

[BkinTX]

My husband is in the military. His ETS date (when he is separated from active duty -- no longer in the military) is in September.

He intends to re-enlist although he can not do it until he passes his PT (physical training) test, which he has been struggling with. So he is in the zone for re-enlistment and retention has been talking to him but he cannot re-up at this point.

As I stated in another thread, our paperwork is to be filed on Monday.

When my husband re-enlists he will likely (although not definitely) receive a sizable (a few ks) bonus (nowhere near enough to even begin touching our debt, unfortunately). Obviously we realize he should not attempt to re-enlist during the bankruptcy.

My questions are:

a) Should this be something we mention at the meeting with the trustee?
(We will ask our legal representation this question as well -- we've just not remembered to ask about it during our meetings with him/her)

b) Could this negatively impact our bankruptcy case?

Thanks in advance for any assistance!

[Flamingo]

Since you are in the military, you fall under the government and you may need to go to the legal services at your hubby's base. You stated you have consulted with legal representation already but you didn't say whether military or civilian. In any event, the situation you describe needs to be reported to your legal counsel representing you during your bankruptcy. Depending on what your hubby does in the military, it should not have a detrimental effect on him reenlisting but he should discuss the matter with the reenlistment folks depending whether or not he needs another credit or background check to reenlist.

[BkinTX]

We are using civilian legal representation.

He should have no problem re-enlisting. I am just concerned about whether this will affect our bk case. And yes, we will definitely bring this up with our legal counsel. I feel like a real dumb a$$, but we have been so busy trying to get all the paperwork and ask all the right questions that we somehow missed this one (since the re-up is not pending -- just something that will come up at a future date).

Thanks for your input!

[BkinTX]

So I read that you have to report any "extra" income you receive within 180 days of filing. I am assuming that means the trustee will take my husband's re-enlistment bonus.

I think he will ask for duty station choice instead of cash. Which sucks because the bonus would be great for building emergency savings and purchasing a cheap minivan after surrendering our SUV.

Will our next income tax return be confiscated as well?

[StartingOver08]

So I read that you have to report any "extra" income you receive within 180 days of filing. I am assuming that means the trustee will take my husband's re-enlistment bonus.
No, you do NOT report extra income you receive within 180 days of filing. The only exception is if you receive an inheritance, property settlement or life insurance payment within 180 days of filing. The rest is yours - even if you make $$ right after filing.

I think he will ask for duty station choice instead of cash. Which sucks because the bonus would be great for building emergency savings and purchasing a cheap minivan after surrendering our SUV.

Will our next income tax return be confiscated as well?

Please do not pass up the cash for your husband's re-enlistment bonus. I am assuming you have filed already or will file long before the re-enlistment issue. As to the tax refund, adjust your deductions prior to your filing so the tax liablity matches the taxes withheld. The Trustee would only get that portion that is an overage for the pro-rata share of the year. For example, say you filed in May 2009, then the Trustee would get 5/12's of the refund. Check this with your attorney to see how it is done in your district.

[BkinTX]

Filing happens on Monday. Re-enlistment would need to happen by September.

Is that too close together?

Thanks for the info on the taxes!

[StartingOver08]

Nope - not too close together.

Remember, the filing date is your "line in the sand". The figures that count are before filing. The income after filing is yours!

[BkinTX]

That is AWESOME news! Thanks for your assistance!

I think that means we are too late to adjust deductions? We typically get a very large ITR (8k or so) -- only his base pay is taxed and we have 4 children. Every single year for the past at least 8 or 9 we have put 90% of that money toward paying debt off and never getting ahead.

I'm ok with losing it -- we're still better off without our debt. But how incredible would it be to sock that away and have some really great savings?

[StartingOver08]

I think that means we are too late to adjust deductions? We typically get a very large ITR (8k or so) -- only his base pay is taxed and we have 4 children. Every single year for the past at least 8 or 9 we have put 90% of that money toward paying debt off and never getting ahead.

I'm ok with losing it -- we're still better off without our debt. But how incredible would it be to sock that away and have some really great savings?

This is exactly the right attitude! This is why we all are here -

[MilitaryWife]

Hi! I just joined BK Forum. And I know this is an old post, but we are having a similar situation.

My husband re-enlisted back in December, and we have our signing meeting on May 22nd. We are moving to his new station on May 27th and do not know when we will be getting his enlistment bonus.

My question is then I guess is if the filing gets done prior to his bonus is it something we then could keep (I'm hoping so, we had to give up our reliable car in the bankruptcy), or because we know it's coming at SOME point do we not have rights to it?

Or if we receive it BEFORE filing I'm guessing then it'll be surrendered?

Any ideas would be greatly appreciated.