Military Pay And The Chapter 7 Bankruptcy Means Test

01 Apr Military Pay And The Chapter 7 Bankruptcy Means Test

Military Debt

The City of New Orleans, where I practice as a consumer bankruptcy attorney, is home to all branches of the United States Armed Forces.

Federal City, which is located in Algiers, a suburb of New Orleans, is the National Headquarters of the Marine Corps Reserve and the Coast Guard.

The Naval Air Station Joint Reserve Base in Belle Chasse, a city on the Westbank of New Orleans, is alsohome to the Navy, Air Force, Army, and Louisiana Air National Guard, along with additional Marine Corps and Coast Guard facilities.

Because of this, I often see members of the military and their families who are experiencing debt issues and are considering bankruptcy.

Unfortunately, while there are some exceptions,like anyone else considering bankruptcy, those in the military must have income below median income to qualify forthe Chapter 7 bankruptcy means test.

For the most part military pay falls into three categories.

Military Debt 2

1. Basic Pay.

Basic Pay isreceived by all members of the military and isbased upon the members pay grade (rank).

Just like employees in the private sector, Federal withholding taxes, Social Security and Medicare are deducted from basic pay.

2. Basic Allowance for Subsistence (BAS).

BAS is rooted in the long standing tradition that the military houses and feeds its personnel.

BAS is meant to offset costs for a member’s meals butis not intended to offset the costs of meals for family members.

While BAS is treated as income, the military does deduct from the enlisted person’s pay for meals that are eaten on base and this deduction will appear on the pay stub, or, as it’s called in the military a Leave and Earnings Statement (LES).

3. Basic Allowance for Housing (BAH).

BAH is an allowance to offset the cost of housing when the enlisted person does not receive government-provided housing.

BAH depends upona number of factors, including pay grade and whether a individual has dependents and the cost of rental properties in the location where the enlisted person is stationed.

4. Exceptions.

There are some instances where the means test does not apply but they are limited.

  • Disabled veterans are exempted from taking the means test if the debts were primarily incurred during service on active duty or while performing a homeland defense activity.
  • Members of the Reserves or National Guard who file while on Active Duty or Homeland Defense Activity for a period of at least 90 days and who file for bankruptcy within 540 days of their release from active duty are exempt from the means test.

If all else fails the enlisted person may have special circumstances that will rebut the presumption that they need to be in a Chapter 13 bankruptcy.


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I've been a consumer bankruptcy lawyer for nearly 25 years. Since that time I have helped many people resolve their financial problems. I have been practicing law since 1986 and I am licensed to practice in all state and federal courts in the State of Louisiana. Because I am a sole practitioner, you know that your debt matters are being handled by me personally. In addition to my work with consumers, I am also frequently asked to speak at local seminars on bankruptcy law. I am member of the following organizations: • Louisiana Bar Association • National Association of Consumer Bankruptcy Attorneys • Bankruptcy Law Network My office is located at: 3920 General DeGaulle Drive, New Orleans, LA 70114 Telephone: (504) 368-4101

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