The HAVEN Act Excludes Certain VA and DOD Benefits in Bankruptcy
On August 23, 2019, the President of the United States signed the Honoring American Veterans in Extreme Need Act of 2019 (“HAVEN Act”) into law. The HAVEN Act amends the calculation of the current monthly income (CMI) in a Chapter 7 or Chapter 13 Bankruptcy, as it excludes certain benefits paid by the Department of Veterans Affairs (VA) and Department of Defense (DOD).
What does this mean?
The Haven Act removes veteran’s benefits from the current monthly income calculation and the bankruptcy process. Current monthly income (CMI) or the Means Test calculates the average monthly income from all sources that a person receives within 6 months prior to filing for bankruptcy.
This number affects whether a person can have debts discharged. Because many Florida military veterans are ineligible for Chapter 7 bankruptcy, they end up filing for Chapter 13. This results in some veterans continuing to struggle with debt.
The new law excludes VA benefits when calculating a Chapter 13 debtor’s current monthly income (CMI). The law eliminates any monthly compensation, pension, pay, annuity, allowance paid to a military veteran under Title 10, 37, or 38 in connection with:
- Disability
- Combat injury or disability
- Death of a member of uniformed services
Retirement pay excluded should include retirement pay under Chapter 61 of Title 10 only when the retired pay exceeds the amount of retired pay to which the debtor would be entitled if retired.
The Haven Act Protects Military Veterans
The Haven Act protects military veterans who served active duty in the Army, Navy, Marine Corps, and Air Force. The law makes it easier for them to file bankruptcy and keep their benefits rather than repay creditors.
This means that military veterans will no longer have to include certain military benefits in the calculation that determines their ability to repay creditors or disposable income. Prior to the HAVEN Act being signed into law, the current monthly income calculation included VA disability and Department of Defense disability payments.
With this new law, military veterans are able to keep their hard-earned benefits earned serving the country while in the military.
Additional Benefits the Haven Act Protects
There are several benefits available to military veterans who served in active duty. According to an article in the Florida Bar Association Business Law Section, additional benefits protected by the HAVEN Act includes the following:
- Dependency and indemnity compensation for service-connected deaths
- Pension for non-service-related disability, death, and service
- Children benefits of Vietnam veterans and other veterans
- Insurance benefits for homeless veterans
- VA pensions
Each of these veteran benefits are now untouchable by creditors in bankruptcy cases.
Contact Our Experienced West Palm Beach Bankruptcy Attorney
If you’re a Florida military veteran considering filing Chapter 7 or Chapter 13 Bankruptcy, contact our experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller. We will answer any questions you have about the bankruptcy process and how the HAVEN Act can affect your bankruptcy relief. Contact our office for more information or a consultation at 561-264-6850.
Resources:
flabizlaw.org/blog/new-cmi-exclusion-haven-act-becomes-law/
congress.gov/116/bills/hr2938/BILLS-116hr2938enr.pdf
https://www.kelleylawoffice.com/is-bankruptcy-the-cure-for-outstanding-student-loans/
