Senators Introduce Bipartisan Legislation to Fix Means Test Disparity for Disabled Veterans

March 7, 2019

U.S. Senators Tammy Baldwin (D-Wis.) and John Cornyn (R-Texas) on March 7 introduced the bipartisan Honoring American Veterans in Extreme Need (HAVEN) Act (S. 679) to protect the economic security and well-being of veterans and their families who rely on disability benefits and may be experiencing financial hardship, according to a press release. Under current bankruptcy law, disability benefits paid by the Department of Veterans Affairs (VA) and Department of Defense (DoD) are included in the calculation of a debtor’s disposable income, increasing the portion of the debtor’s income that is subject to the reach of creditors. By contrast, bankruptcy law explicitly exempts Social Security disability benefits from this calculation. To remove this unequal treatment among various disability benefits, the HAVEN Act would exclude VA and DoD disability payments made to veterans or their dependent survivors from the monthly income calculation used for bankruptcy means tests. “Forcing our veterans and their families to dip into their disability-related benefits to pay off bankruptcy creditors dishonors their service and sacrifice. These benefits are earned, and we must do right by our veterans and protect their economic security, especially during challenging times,” said Baldwin. Cornyn added that “disabled veterans fought for their country at great cost, and they shouldn’t need to fight to protect their disability benefits from creditors during bankruptcy.” Holly Petraeus, member of ABI's Veterans' Task Force and former Assistant Director of the Consumer Financial Protection Bureau, Office of Servicemember Affairs, said that she was surprised to learn that a flaw in the Bankruptcy Code was denying disabled veterans the protections that it offered to all other Americans receiving disability income. "The HAVEN Act fixes that flaw, and I’m happy to join its many bipartisan co-sponsors as an individual sponsor of the bill,” Petraeus said. For more information on the HAVEN Act, please click here

To read the full bill text, please click here

For more on this issue, be sure to read this November ABI Journal article or listen to this special ABI podcast.

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