Friday, May 15, 2015

Veterans and Military Members, financial institutions are not our friends ...

Image courtesy of Ambro at
This isn't a bad thing but everyone really needs to understand what these institutions are offering. Night after night during prime-time TV, I watch ads for banks and lenders that have "special offers" for veterans and drive out any main gate of most bases and you will see signs all over offering military loans. The TV ads are steeped in patriotism and talk about the receiving what you have earned. They also have retired military officers and enlisted spokespeople hawking their services. It all sounds great and some organizations are better than others.

But it is important to understand what these organizations are offering. They are offering access to money. They are not offering protection. The programs do not offer any special protection if you fall on hard times. The banks and lenders will take legal action against a veteran or service member just like every other borrower.

Remember, these institutions are not people; they have no soul, no heart, no sense of patriotism... they are organizations created for one reason ... existing for one reason ... and that is to make money. And when it comes to money, we, veterans and military members, are a good bet.

We are a good bet because we tend to have stable income, we have a sense of duty and commitment to our word, we have been trained to overcome adversity, we are more disciplined than many others, and, even more important, the US government guarantees a big chunk of our mortgages and debts through VA Loans and, I believe, SBA loans for veterans. So the banks and finance companies are willing to lend us their money expecting a more stable return even if the interest is a little lower.

But if we fall on hard financial times and fail to meet our obligations, the creditors will come for us. I do not know of many safety nets programs created especially for veterans. I've seen on social media where military members are losing or lost their homes venting because they believe there are programs out there to protect other segments of our community but not us.

First, those diversionary programs are open to everyone. You should also know those protection programs fail the average civilian as often as they fail veterans and military members. From what I have witnessed in my practice, sometimes the programs work and people can streamline or refinance their mortgage and sometimes they get eaten up by the bureaucracy and forced out of their homes too. So, again, we are all in the same boat.

With that said, these loans are a benefit. We gain access to loans that would otherwise not be available. We can buy a home and start a business. We just need to be smart about it.  We need to evaluate how much we can afford to pay, weigh the risks of deployment, recognize some of us are still subject to transfers, and others need to understand that they now have a fixed income. We were trained to plan too.

If all your planning fails and you find yourself in financial trouble, I have a couple suggestions. First of all, I would be reluctant to refinance my home or take out a home equity line of credit  (HELOC) to pay off credit cards. That turns unsecured debt into secured debt and places your home at a higher risk of being lost. Also, avoid raiding your TSP. Retirement accounts are protected by federal and usually state laws.

Don't put off the inevitable. If you have trouble look for help immediately; look to the military aid societies, local and national charities, local and county services. If these services are not available or insufficient to help you, start looking at your legal options. First you can look to a debt management service. They can help establish a budget and work with creditors to reduce interest, service charges, and penalties. I would avoid debt settlement companies. They can create  bigger mess before they settle your debt.

Finally, if all else fails, bankruptcy is an option. For filing under chapter 7, military members who came to this point because of active duty commitments are not subject to the means test. Chapter 7 is used to quickly discharge unsecured debt and give people a fresh start. If your mortgage is current, you can usually keep your home.

If you are behind in your mortgage and you want to keep your home, you may be able to file for protection under chapter 13 of the bankruptcy code. This can allow you to establish a payment plan to catch up your mortgage. Believe it or not, bankruptcy can protect you and get you back on track.

While our financial institution can provide us access to loans, we cannot expect them to protect us if things go wrong. We need to rely on ourselves ... our training ... our character to get us through the hard times. If that doesn't work, we must seek help in our community or in the law. The quicker we do so, the better the chances we can minimize the damage.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at

Previous Blog Entries:
Rebuilding credit after Bankruptcy...

When will I be able to buy a new home after bankruptcy?

You can overcome bankruptcy...

Debt What?

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