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.[Footnote 1] Generally, debtors who file under chapter 7 of the
bankruptcy code seek a discharge of all their eligible dischargeable
debts.[Footnote 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 years.[Footnote 3]
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.
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
Secretary of Defense for Personnel and Readiness. We used data on
bankruptcy filings for the U.S. population from the Administrative
Office of the U.S. Courts. We also used findings from GAO;
Congressional Budget Office; Congressional Research Service; and
Department of Labor, Bureau of Labor Statistics reports on
compensation, military housing allowances, other benefits, and
unemployment. We conducted our review from January to February 2004, in
accordance with generally accepted government auditing standards.
 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.
 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).
 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).