Florida veterans often pay a heavy price for their service to their country. The physical and emotional toll can be devastating, and financial hardships often result. In many cases, filing bankruptcy helps veterans get some breathing room from overwhelming debt and move forward with their lives. At Lewis Roberts, PA, I often help clients determine if bankruptcy is right for them.
The Honoring American Veterans in Extreme Need Act of 2019 became law in August 2019. Veterans make up a significant percentage of bankruptcy filers. Although retired military personnel make up approximately 10% of the overall population, they are almost 15% of Chapter 7 and Chapter 13 bankruptcy filers. Known as the HAVEN Act, the new law addresses the financial hardships experienced by disabled veterans.
Before the HAVEN Act, Department of Defense disability and federal Department of Affairs (VA) payments were included as disposable income in bankruptcy. This means that creditors could claim the funds. Since the Act’s ratification, military disability benefits are exempt. They now have the same protection as Social Security disability.
The National Consumer Law Center states that Chapter 7 and 13 both use current monthly income (CMI) as a determining factor for the amount of disposable income. This calculation also helps determine whether the individual filing Chapter 13 has a three or five year commitment period. If a debtor files Chapter 7 and has mostly consumer debts, he or she is subject to a “means test,” which deducts allowed expenses from the current monthly income. If income exceeds a specific amount, the bankruptcy court may dismiss the case.
The HAVEN Act excludes the following income sources for disabled veterans:
- Disability Severance Pay
- Permanent & Temporary Disability Retired Pay
- Combat-Related Special Compensation
- Survivor Benefit Plan for Chapter 61 Retirees
- Disability and Death Benefits
- Special Compensation for Assistance with Activities of Daily Living
Approximately 4.75 million United States veterans receive VA disability benefits. The new law provides relief to retired military personnel. However, not all benefits are exempt. Talking with an experienced bankruptcy attorney helps you navigate the complex process of choosing whether Chapter 7 or 13 best suits your needs.
Call me at 407-749-0080 or schedule an appointment to learn more about your options for handling bankruptcy, student loan debt, and other consumer credit issues. My office is conveniently located in Altamonte Springs near the Altamonte Mall.