Military Star Card and Bankruptcy

Military star cards are given to active or retired members of the armed forces and Department of Defense (D.O.D.) employees who work overseas.1 These cards are issued by the Army and Air Force Exchange Service (A.A.F.E.S.) and provide veterans with lower interest rates and no annual fees so they may purchase general items from Post Exchange stores.2

How does a bankruptcy affect a Military star card?

A Military star card is considered a secured credit card, secured by the items you purchase at Post Exchange stores. A�This means that if you wish to discharge the liability on the card you will have to turn over the items you purchased. A�If you are active in the military and wish to declare bankruptcy to clear your debt, it is best to start by talking to your military base financial officer. It is also helpful to speak with a bankruptcy attorney who is familiar with the chapter filing that best meets your needs. Your local JAG office will not be able to represent you in a bankruptcy proceeding though.4

Chapter 7

A Chapter 7 or liquidation bankruptcy is probably a more common way to discharge your Military star card debt. To qualify you must pass a means test that shows your current monthly income is below the statutory threshold for your family size.5 Once you meet the requirements for a Chapter 7 bankruptcy you will have an automatic stay placed on your debt so your listed creditors cannot attempt any collection efforts. For military star cards, these creditors are D.O.D. agencies.6 In this kind of bankruptcy most if not all your debt can be discharged.7

Chapter 13

In a Chapter 13 bankruptcy you create a court-approved three to five year repayment plan to pay off your some or all of your debt. Once you have filed your bankruptcy petition you will have an automatic stay just like you would under a Chapter 7 bankruptcy.

Can my military wages be offset by Military star card debt?

Yes. The Treasury Offset Program allows the government to use your tax refund to offset any federal debts.8 Since the D.O.D. participates in this program you could lose your IRS tax refund if you default on one of your cards.9 If you are in this situation, declaring bankruptcy may be an attractive option to wipe out your Military star card debt.

[1] Baran Bulkat, Military Star Credit Card Debt in Bankruptcy,, (last visited Nov. 20, 2014).

2 Baran Bulkat; Briggs v. U.S., complaint No. CV-07-5760.

3 I’m Considering Bankruptcy, But Will It Get Rid of All My Debt?,, (last visited Nov. 20, 2014).

4 Military Bankruptcy,, (last visited Nov. 20, 2014).

5 Mary Jane Freeman, How to File Bankruptcy With a Military Star Card,, (last updated July 8, 2014).

6 Can A Tax Refund Be Taken For Military Star Card, (May 13, 2014), (last visited Nov. 20, 2014).

7 Lynndee Marooney, Does a Military Star Card Fall Under Bankruptcy Rules?,, (last visited Nov. 20, 2014).

8 Can A Tax Refund Be Taken For Military Star Card, supra note 6.

9 Id.