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GAO-04-465R 1 (2004-02-27)

handle is hein.gao/gaocrptapyq0001 and id is 1 raw text is: Accountability * Integrity* Reliability United States General Accounting Office Washington, DC 20548 February 27, 2004 The Honorable Richard J. Durbin Ranking Member Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia Committee on Governmental Affairs United States Senate Subject: Military Personnel: Bankruptcy Filings among Active Duty Service Members A declaration of bankruptcy is an extreme example of the failure to manage personal finances. Debtors who file personal bankruptcy petitions usually file under chapter 7 or chapter 13 of the bankruptcy code.' Generally, debtors who file under chapter 7 of the bankruptcy code seek a discharge of all their eligible dischargeable debts.2 Debtors who file under chapter 13 submit a repayment plan, which must be confirmed by the bankruptcy court, for paying all or a portion of their debts over a 3- year period unless, for cause, the court approves a longer period not to exceed 5 3 years. This letter responds to your December 16, 2003, request. As agreed with your office, we determined (1) the rate of personal bankruptcy filings among active duty military personnel, and how that rate compared with the rate found in the U.S. population; and (2) factors that should be considered when attempting to compare the rate of bankruptcy filings for active duty military personnel with the rate for the U.S. population. To respond to this request, we obtained information on the rate of bankruptcies among active duty military personnel from a 1999 Department of Defense (DOD) survey. The survey population included service members from the active duty services and reservists serving on active duty assignments for at least 6 months. We also discussed bankruptcy and compensation with officials in the Office of the Under 'Title 11, United States Code. 2 Eligible debts may be discharged in bankruptcy proceedings. A dischargeable debt is a debt for which the bankruptcy code allows the debtor's personal liability to be eliminated. 3 See U.S. General Accounting Office, Personnel Bankruptcy: The Credit Research Center Report on Debtors'Ability to Pay, GAO/GGD-98-47 (Washington, D.C.: Feb. 9, 1998). 4 For information on reservists and income changes, see U.S. General Accounting Office, Military Personnel: DOD Needs More Data to Address Financial and Health Care Issues Affecting Reservists, GAO-03-1004 (Washington, D.C.: Sept. 10, 2003). GAO-04-465R Military Bankruptcies Page 1

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