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HAVEN Act offers protection to veterans filing for bankruptcy

Veterans in California may be at a disproportionate risk for having to file bankruptcy. While veterans are only around 10% of the overall population, they make up 15% of bankruptcy filers. In 2017, there were around 125,000 bankruptcies filed by veterans. However, the Honoring American Veterans in Extreme Need Act of 2019 may offer additional protection to veterans.

The HAVEN Act was a bipartisan effort signed into law on August 23 for immediate effect. It makes a number of benefits exempt when calculating a veteran's disposable income for bankruptcy purposes. Until its passage, disability payments from the Department of Veteran's Affairs and the Department of Defense were included in these calculations. This also meant those benefits were vulnerable to creditors. Only Social Security disability benefits were protected. Advocates began pressing for the passage of the HAVEN Act after five bankruptcy courts ruled that veterans filing for bankruptcy were required to include these benefits.

Around one-quarter of the total population of veterans, 4.74 million, get disability benefits from the VA. Among the benefits specifically protected are combat-related special compensation, the special survivor indemnity allowance, disability severance pay and more.

Veterans or others who are struggling with debt might want to talk to an attorney about filing for bankruptcy. Debt can mean harassment or lawsuits from creditors. Filing for bankruptcy puts an immediate stop to all creditor action, including home foreclosures. If a person qualifies for Chapter 13 bankruptcy, it may be possible to keep the home and some other assets. The person must work out a payment plan to repay creditors over three or five years. In Chapter 7 bankruptcy, most of a person's debts are discharged, and the person is still permitted to keep some assets. A person's income determines their eligibility for debt relief via Chapter 7 or 13 bankruptcy.

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