President Signs Legislation To Help Veterans With Bankruptcy
On Friday, August 23rd, 2019, President Donald Trump signed two pieces of legislation that will help veterans and service members when it comes to bankruptcy.
The first is the Honoring American Veterans in Extreme Need Act of 2019 or the HAVEN Act. This will prevent debt collectors from seizing veterans’ disability compensation if they declare bankruptcy.
The objective of the HAVEN Act is to secure the economic well-being of veterans and dependents who rely on disability compensation and may be experiencing financial hardship. It would exclude the VA and DoD disability payments made to veterans or their dependent survivors from the monthly income calculations.
Under the current law, any disability benefits that are paid by the Department of Veterans Affairs, and the Department of Defense are included in the calculation of a debtor’s disposable income, which increases the income that is subject to creditors. The current law also exempts social security disability benefits so it makes sense that veterans’ disability benefits should be exempt as well.
Forcing veterans to dip into those funds to pay off creditors can be seen as a dishonor to their service and could also lead to more veterans having to depend on public assistance.
The Act has been endorsed by many groups such as The American Legion, Veterans of Foreign Wars, Disabled American Veterans, Paralyzed Veterans of America, Iraq and Afghanistan Veterans of America, and Wounded Warrior Project. It has also been a bipartisan effort with cosponsors such as Senators Tammy Baldwin (D-WI), John Cornyn (R-TX), Dianne Feinstein (D-CA), Joni Ernst (R-IA), Tammy Duckworth (D-IL), and Marco Rubio (R-FL.)
In addition, President Trump also signed the National Guard and Reservists Debt Relief Extension Act of 2019. The original Act began in 2008 and was created as a temporary exemption until December of 2019. With the Extension Act, it will be extended for four more years.
This Act offers National Guard and Reserves protection during bankruptcy proceedings as long as they have served at least 90 days on active duty. Sometimes, these soldiers will make more during active duty than they do at their civilian jobs, and so if they are assessed based on that income, even after they are home, they will end up with a higher pay amount if they file for bankruptcy. This Act offers protections so that this does not happen. It was introduced into the Senate by Judiciary Committee Chairman Lindsey Graham (R-SC) and Ranking Member Dianne Feinstein (D-CA) in July of 2019.