People want instant gratification. Consumers are urged every day to buy now and pay later. Unfortunately, credit is so easy to get that you may become overextended within months of receiving your first real paycheck. But when a service member is unable to pay his or her debts, the repercussions can be serious and long lasting.

Members of the U.S. military are expected to settle their financial obligations in a proper and timely manner. You've probably heard that phrase many times, but have you considered what will happen if you fail to meet these obligations?

If you neglect to pay your bills, creditors can contact your command, hoping that command pressure will inspire you to pay the debt. Generally, this contact is made in a letter of indebtedness (LOI). The Navy receives as many as 123,000 LOIs every year.

While the command can't order a member to pay a debt, nor settle any dispute with creditors, the LOI does bring your financial problems to the attention of your command.

Failing to pay your debts is considered evidence of irresponsibility and can affect advancement, re-enlistment, and receipt of security clearances. In severe and repeated cases, you may be subject to administrative separation or disciplinary action, including confinement, forfeiture of pay, or a bad conduct discharge.

Bankruptcy: Not an Easy Way Out
Should your financial situation decline to the extent that you consider filing bankruptcy, educate yourself before signing anything. Contact the base legal office for information, or do some research on the Internet about bankruptcy and how it can effect you. Take a look at Bankruptcy at iVillage.com.

There are several types of bankruptcy. Chapters 7 and 13 apply to individual debtors. Through a Chapter 7 bankruptcy, some of your debts are discharged, meaning you no longer have to pay them. However, your assets may be sold to cover part of your debts. In Chapter 13, you are required to work out a payment plan to repay your creditors. You can keep some of your assets, but you must continue making payments.

Bankruptcy is touted as an easy way out of debt, but the effects of a bankruptcy filing are long lasting. Depending on whether you file for Chapter 7 or 13, you may face any of the following:

• Your assets may be sold, including your car, computer, jewelry, etc.
• You remain responsible for certain debts, such as child support, alimony, taxes, and student loans.
• You may face cancellation of insurance or the inability to obtain adequate and cost-effective insurance.
• You will face decreased ability to qualify for additional credit.
• If you do qualify for credit, it may be at significantly higher interest rates.
• You may not qualify for services such as cell phones or cable TV.
• Bankruptcy appears on your credit report for seven to 10 years. However, you may face questions on job or loan applications asking if you have ever filed bankruptcy even after the 10 years have passed.
• You must pay attorneys fees and court fees, which can be as high as $1,000 or more.
• Your standard of living could decline.
• A bankruptcy court trustee will review your personal finances in detail. You may have to appear at a creditors meeting and answer questions regarding your debts and your inability to pay them. This can be terribly humiliating.

Bankruptcy is not an easy way out. It is traumatic, professionally and personally, and should be considered a last option.

You'll know you have financial problems long before the command becomes involved or bankruptcy is considered. Avoid the humiliation and stress associated with LOIs and bankruptcy by learning to manage your income, your debts and your spending. If you don't know how, there are resources available to assist you: Contact a financial counselor at your command, the Fleet and Family Support Center, Marine Corps Community Services or Navy-Marine Corps Relief Society.

It can be difficult to confront serious debt problems head on, but it's well worth your peace of mind, both at work and at home.