Do you ever wonder how bad rumors get started? Bad headlines don’t help.
Congress is considering a new piece of legislation. It’s called the HAVEN act. The act will correct a problem that has existed since the 2005 overhaul of bankruptcy.
If you are a veteran who receives disability income from the VA, that money is counted in your means test. In other words, it counts against you in bankruptcy, whereas regular disability income does not.
Frankly, that’s not fair.
The HAVEN Act saves the day
That’s where the HAVEN act comes in.
Chapter 7 bankruptcy is a liquidation bankruptcy (it’s what most people who are in big debt want) and it gets rid of all of your debts that are dischargeable. The problem is, you have to qualify for a Chapter 7 via the means test.
This military disability increases your total income, which in turn can cause your income to be so high that you are forced to do a Chapter 13 bankruptcy.
The HAVEN act eliminates military disability income from the means test just like regular SSI disability and gives you a big boost.
There is, unfortunately a lot of rumors going around about the current state of bankruptcy and military benefits.
Misconceptions about the current system
A reporter for the military times has stated that veterans who file bankruptcy under our current system risk having the benefits taken away. He states “Bankrupt vets can lose their disability benefits.”
This is patently false.
The current system allows the military disability benefits to be counted in the means test, but it by no means eliminates your disability benefits.
All this means is that IF your income is high enough, it could cause you to have to do a Chapter 13 bankruptcy instead of a Chapter 7.
But, I repeat, you do not LOSE your benefits. You still get a check from the VA every month just like you always did and will continue to do for the rest of your life.
If you file a Chapter 7 bankruptcy, the trustee can’t take your check from YOUR bank account.
Additionally, the Chapter 13 trustee does not take them from you either. They still go into YOUR bank account and you may have to use some of your disability money to make your Chapter 13 payment.
While all of this may seem confusing, rest assured, as a bankruptcy lawyer, it’s my job to understand the nuances of the law and make sure you get the best outcome possible. Trust me, I do and you will.
If you’re a veteran who is concerned about your VA benefits and the bankruptcy process, call me. I understand it a lot better than you may think (I actually work with veterans to get VA disability for them as well).
We’re here to help, especially those who have worked so hard and sacrificed so much already.