Owe military bonus, incentive or special pay? It may not be dischargeable in bankruptcy

Posted on Mar 04, 2017

If you received a bonus for re-enlisting in the Army, Navy, Air Force or Marines, and for some reason could not complete your agreed-upon service, you may have to repay part or all of the money. And the reenlistment bonus cannot be discharged in bankruptcy for 5 years after the termination of your agreement or contract, or if you don't have an agreement or contract, 5 years after the termination of the service. on which the debt is based. 37 U.S.C. Sec. 303a.

I had a case like this one time where a person had attended a military academy, but did not complete their promised length of service. It was the same thing; he could not discharge the debt in bankruptcy, at least for five years.

There are some exceptions to having to repay the bonus, incentive or special pay. If you received a "sole survivorship discharge," if you retired or separated with a combat-related disability, or if the Secretary of Defense determines that making you repay it "would be contrary to a personnel policy or management objective, would be against equity and good conscience, or would be contrary to the best interests of the United States." 37 USC Sec. 303a(e).

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