Legal

Published on March 22nd, 2022 | by Bibhuranjan

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What You Need to Know About Veterans and Bankruptcy

Our veterans stand in the front line fighting for our freedom. They are brave, and we owe them a debt we can neither quantify nor repay. Sadly, like other citizens, veterans too might encounter financial difficulties. Sometimes, these hardships could lead veterans into a financial crisis that can only be resolved through declaring bankruptcy. While there is an 11 word phrase that can stop debt collectors from contacting you, you may have to go to extra measures. Fortunately, as a veteran, filing bankruptcy could come with benefits that other citizens do not enjoy. Read on to understand everything about veterans and bankruptcy.

Do Disabled Veterans Take Bankruptcy Means Test?

Before filing bankruptcy, you should take The Chapter 7 Means Test Calculator to determine if you qualify to file for bankruptcy and get a bankruptcy discharge based on your income. A bankruptcy discharge forgives your debt by eliminating your legal obligation to repay outstanding debts. Therefore, it forbids creditors from taking action like pursuing or suing you to collect the debt.

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Who Is Exempted from Taking the Bankruptcy Means Test?

There are three classes of veterans who can fail to take the Means test and will still be eligible to receive bankruptcy discharge:

Disabled Veterans

You needn’t take the test if you sink in debt when on active duty or when undertaking homeland defense activities.

A Former or Active Reservist or National Guard Member

If you have been called for a homeland defense activity or active duty for 90 days, you are exempted from taking the Means Test during the 90 days and the next 540 days. However, if the period during which you can object to qualifying for filing bankruptcy has not expired, you might have to take and pass the test to be eligible for discharge.

Business Debts

You are exempted from taking the test when filing for bankruptcy to get rid of primarily non-consumer debts. The exemption is only valid when more than 50% of your debts are non-consumer. That is, you incurred the debts during business transactions. So, if you are a self-employed veteran in debt, you need to be cautious. If you made drawings from the business in the form of goods for your personal use, consider consulting a bankruptcy attorney to decide if you should take the Means Test.

Do you fall among the three outlined above and thus, believe you shouldn’t take the Chapter 7 Means Test? You need to file the Bankruptcy Form 122A-1Supp. Nevertheless, instead of making assumptions and later finding out, you were required to take the test, always consult a bankruptcy lawyer beforehand to confirm your exemption.

The Haven Act and How It Helps Veterans in Bankruptcy

The Honoring American Veterans in Extreme Need’ is an Act passed to law on August 23, 2019. This Act offers extra protection for disabled military veterans during bankruptcy proceedings. It excludes military disability veterans from the Means Test and calculation of their current disposable income to honor them.

The Haven Act eliminates the benefits paid to disabled veterans and the benefits are given to their families from the Means Test. Other benefits protected under the Act include

  • Payment to a survivor of a service member
  • Disability severance pay
  • Combat-related special compensation
  • Disability-related retired pay. It is paid to the extent they exceed the amount the disabled veteran would have received had he retired without disability.
  • Death and disability payments

The benefits extend beyond those mentioned above. If you have more questions about the Haven Act, you can get more information from the U.S. Department of Justice website.

Veteran Incomes That Must Be Included

Although disabled veterans are exempted from disclosing their income and filing out some income forms when taking the test, there is some income information they must include.If you are still serving in the military, you are required to include your income in the Means Test.

Additionally, you should also include some benefits paid for current service members, like the retirement pay for those on the temporary disability retired lists. The monthly special compensation should also be included.

Can You Get Reliable Bankruptcy Assistance from the Veterans Administration?

Suppose you need assistance with your bankruptcy case as an armed forces member or a veteran. In that case, you can seek reliable, professional legal advice from the Department of Veterans Affairs or the U.S Armed Forces Legal Assistance Program.

You are not constrained to the two options. Whether you are in active service, a veteran, or a disabled veteran, you can schedule your consultation with a reliable bankruptcy lawyer. They understand the law and can offer the same guidance you would get by seeking help through the programs mentioned above.

You Can Apply for a VA Mortgage Loan after Declaring Bankruptcy

After doing your research on Chapter 7 and Chapter 13 bankruptcy, you understand that it focuses on liquidation. Therefore, a concern for many veterans is how they will afford to buy a home after declaring bankruptcy. Fortunately, as a veteran, you are still eligible to file for a VA mortgage with

Nonetheless, you might need to wait two years to get the VA home loan after getting a bankruptcy discharge. You will also need to meet the VA mortgage requirements to be approved.

Do You Have Any Questions on Veterans and Bankruptcy?

When looking into filing bankruptcy, you will need to have state-specific information on the cost. So, if you live in Arkansas, you’ll need to ask “how much does it cost to file bankruptcy in Arkansas.” Alternatively, if you live in Washington, you need to ask “how much does it cost to file bankruptcy in Washington.” Basically, you need to have state-specific cost information to make sure you are accurately estimating what you may have to pay for your bankruptcy.

Are you a veteran in a financial crisis and are considering filing for bankruptcy? You need to consider a lot before choosing bankruptcy as your best debt relief option. You can get in touch with our bankruptcy experts today by scheduling a free consultation. Reach out with any questions you may have and to discuss available debt relief options available for you as well as the advantages and disadvantages of each.


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Editorial Officer, technofaq.org I'm an avid tech enthusiast at heart. I like to mug up on new and exciting developments on science and tech and have a deep love for PC gaming. Other hobbies include writing blog posts, music and DIY projects.



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