Veterans of the U.S. military make up a disproportionately large percentage of people who file for bankruptcy. Almost 15% of those who file for protection under Chapter 7 or Chapter 13 of the Federal Bankruptcy Code are military veterans; the group makes up only around 10% of the population overall. During the year 2017, roughly 125,000 military veterans in Tennessee and across the country filed for bankruptcy. A newly passed federal law will provide greater financial protections to veterans who file for bankruptcy.
The law is called the Honoring American Veterans in Extreme Need Act of 2019, or the HAVEN Act. Prior to its passage, disability payments received from the Department of Veterans Affairs or the Department of Defense were included when the bankruptcy filer's disposable income was calculated. These payments were reachable by creditors even after a veteran had filed for bankruptcy, that is. Disability benefits from the Social Security Administration were already excluded from these calculations.
Under the terms of the HAVEN Act, disability benefits from the VA or DoD are excluded from disposable income calculations and protected from creditors in the same way as Social Security disability payments. The HAVEN Act specifically protects permanent and temporary disability retired pay, disability severance pay, combat-related special compensation, VA veterans pension funds, special survivor indemnity allowances, VA indemnity and dependency compensation and VA disability compensation. The Act was passed in the Senate and the House with bipartisan support.
Veterans and others in Tennessee who are struggling to pay off their debts might want to speak with a lawyer about debt reduction or elimination options. A lawyer who practices bankruptcy law might be able to help by reviewing the facts of the person's situation and suggesting a Chapter 7 bankruptcy or Chapter 13 bankruptcy filing to protect the debtor from creditors. A lawyer may help the person complete pre-filing requirements or represent him or her at the meeting of creditors.