California veterans often pay a high personal price for their service. If you suffered physical and emotional trauma, permanent disabilities and severe chronic conditions, the trajectory and quality of life might have changed drastically. Although veterans can receive monetary benefits under federal law, the medical expenses and lost wages are significantly more than those benefits can cover. As bills pile up, you may consider bankruptcy. At the Law Office of Terrence Fantauzzi, I often help clients determine if the HAVEN Act helps them become eligible for Chapter 7 or Chapter 13.
HAVEN Act 2019
Retired military personnel make up approximately 10% of the U.S. population but accounts for 15% of the bankruptcies. Until recently, you had to give up the federal benefits to get a small amount of breathing room. The Honoring American Veterans in Extreme Need Act helps you get the relief you need. Disabled veterans are now exempt from the means test that determines whether you qualify for bankruptcy
California Means Test
Before the HAVEN Act, if your monthly household income was more than the median California income for a household of your size, bankruptcy law required that you pass a means test to qualify for Chapter 7. Military benefits counted toward that income. As a result, many residents of Pasadena, Rancho Cucamonga and Oxnard didn’t qualify for the help that could discharge the bulk of their debt.
Filing for Chapter 13 was an option, but instead of wiping the slate clean, it restructures the debt under a three to five-year repayment plan. Under this option, financial institutions consider the Federal Department of Affairs and Department of Defense benefits disposable income. This means that creditors could claim the funds for repayment.
Benefits of the HAVEN Act
If you are a disabled veteran and you incurred significant debt as a result of performing your military duties, you are exempt from the means test. Another change is that bankruptcy law no longer views your VA benefits as disposable income. They are now exempt, similar to Social Security benefits. This makes it easier to qualify for Chapter 7.
Additional benefits previously viewed as disposable income that are now exempt include:
- Permanent & Temporary Disability Retired Pay
- Combat-Related Special Compensation
- Disability & Death Benefits
- Survivor Benefit Plan for Chapter 61 Retirees
- Disability Severance Pay
- Special Compensation Assistance with Activities of Daily Living
Chapter 7 gives disabled veterans and their families the chance to get out from under overwhelming debt. Contact me today or call 909-552-1238 to schedule a consultation via phone, video conferencing or in person. We can discuss your options and help you start recovering and rebuilding your financial future.