Finally! Relief for veterans! In late this summer, on August 23, 2019, the Honoring American Veterans in Extreme Need Act of 2019 (HAVEN Act) was signed into law. The Haven Act provides help for veterans in financial need.
What Does It Do?
The HAVEN Act provides for the exclusion of disability benefits paid by the U.S. Department of Veterans Affairs and the U.S. Department of Defense from the calculation of an individual debtor’s disposable income used for the “means test” required in most bankruptcy cases. The good news is that disability benefits may be excluded for determining whether a veteran filing bankruptcy must file a Chapter 13 case that includes a plan of reorganization that pays disposable income to creditors.
While veterans make up approximately 10 percent of the overall population, 15 percent of the individuals filing chapter 7 and chapter 13 bankruptcy cases are veterans, which clearly indicate that veterans make up a disproportionate share of bankruptcy debtors. Almost 125,000 veterans filed for bankruptcy in America in 2017.
A 2018 VA Annual Benefits Report stated that 4.74 million veterans of the United States military, which is 25 percent of the entire veteran population, receive disability benefits from the Veterans Administration (VA). Disabled veterans receive disability-related benefits as a result of their in defense of America. Forcing disabled veterans and their surviving dependents to use these funds to pay creditors is an insult and dishonor to their service.
Prior to the enactment of the HAVEN Act, disabled veterans declaring bankruptcy were required to include their disability benefits as disposable income, increasing it to the threshold that could force them to file for a Chapter 13 debt reorganization bankruptcy instead of a Chapter 7 liquidation.
While veterans receiving disability benefits were required to make this inclusion in disposable income, disabled Americans filing bankruptcy, Americans whom these veterans served and protected, were not required to include their disability benefits in a disposable income calculation.
The HAVEN Act now excludes VA and Department of Defense disability payments made to veterans or their dependent survivors from the monthly income calculation used for calculating disposable income on the means test. The Act enables more disabled veterans and their surviving dependents to be eligible to file a Chapter 7 liquidation case where only the proceeds of their nonexempt assets, not their disability benefits, are used to pay creditors.
There are always exceptions to any law, rule, or statue. This also applies to the HAVEN Act, as not every type of VA or DoD benefit is excludable from the disposable income calculation. An experienced and knowledgeable Utah bankruptcy attorney can make this analysis and explain all the available options.
Like the Social Security Act assists those citizens receiving social security benefits, the Haven Act assists honored veterans and their surviving dependents in obtaining an opportunity for a fresh start. The Morrison Law Group is a team of seasoned bankruptcy attorneys who have helped 8,000 Utah residents file bankruptcy and gain a fresh start.
Call the Morrison Law Group at 801.456.9933 today to schedule a FREE consultation. We are Utah’s only statewide bankruptcy law firm and have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.
