Wayne at HVAF

For Wayne H., 56, getting out of the credit card hole was not easy. “I made poor choices like purchasing a new car,” says Wayne. “The interest payments became too high and I got way over my head…I basically owed $9,000 on a $2,000 car.”

Wayne admits the car was an impulse buy but one he needed in order to get to and from work.

Now a partnership between the Hoosier Veterans Assistance Foundation (HVAF) and the Neighborhood Christian Legal Clinic (NCLC) is giving more veterans at HVAF a chance receive the help they need. Wayne spent three months homeless before coming to HVAF in October 2013. Since then, the U.S. Army veteran has relied on HVAF transitional housing and services.

Wayne admits the car was an impulse buy but one he needed in order to get to and from work.

The Clinic has been working with Wayne H. since December, 2013. In January, the Clinic assisted Wayne in filing a Chapter 7 bankruptcy, but first, Wayne attended both pre and post-bankruptcy classes to make sure he was making the best decision.

“Although it is always a last resort, filing bankruptcy provided Wayne with relief from approximately $52,000 of debt. Wayne is working full-time at the Indianapolis airport. This bankruptcy protected his wages from being garnished and provided Wayne with a fresh start financially,” says Brian Dunkel, attorney at the Neighborhood Christian Legal Clinic.

Veterans seeking advice or legal representation in bankruptcy is approximately 25% of the intakes at HVAF so it is a significant portion. It provides short-term and long-term relief to a veteran by protecting wages from garnishment.

“I have noticed that wage garnishments often keep clients from self-sufficiency—there is just not enough money to cover rent, utilities, and food,” says Brian.

While federal laws severely restrict lenders from exploiting servicemen these days, some veterans may still have old “payday” loans, rent to own furniture bills or old auto loans they cannot pay. Even if the furniture or car was repossessed, a veteran could still legally owe the debt and unless a veteran has a great job or a healthy retirement plan, he will likely qualify for Chapter 7 bankruptcy.

Chapter 7 is the most drastic but effective form of debt relief, as it permanently eliminates the veteran’s financial obligation to repay most debts. However, anyone filing Chapter 7 including a military service member cannot include some types of debt. Recent tax bills, child support, alimony, court fines or any debt related to a crime are ineligible for debt assistance.

Chapter 13 is another option for veterans who still have a decent income but just need a little help to get back on their financial feet. In Chapter 13, a court trustee supervises partial repayment of debts. It takes three to five years to finish a Chapter 13 plan, but during this time a debtor cannot get any new credit without a judge’s permission.

Filing bankruptcy is not a decision Wayne took lightly. However, it will provide a lot of financial relief as Wayne looks to the future on that will provide him with a fresh start.

“I am working on saving money and am off to a new start in 2015,” adds Wayne.