VA Benefits – Must be Declared in Bankruptcy

March 20, 2017
VA Benefits – Must be Declared in Bankruptcy

 

Veteran benefits are NOT garnishable by a creditor.  That much is true.  Except if it is for a domestic support obligation.  If you did not file a bankruptcy case, no creditor may garnish your VA benefits by sending a garnishment order to the VA, or by garnishing a bank account if the only money it receives is VA benefits.

BUT, VA benefits must be declared in your bankruptcy paperwork if you file a bankruptcy.  Someone is telling our veterans that their VA benefits are absolutely sacred (which is true) and that they do not need to be disclosed to anyone, anywhere.  I appreciate the sentiment behind that advice – the veteran has more than earned his benefits and the veteran deserves to be taken care of by the government.  But I see some veterans hesitate to declare their disability benefits because they fear that they are not supposed to disclose it.  The messaging is confusing to them – the message should be no one can touch your benefits.  But it can be construed as – you should NOT have to disclose those benefits to anyone.

You will not get into trouble for disclosing your benefits.  In fact you must disclose your benefits in your bankruptcy paperwork.  No one is going to be able to take your benefits but if your benefits plus your income does produce a fairly healthy budget, you may have to consider filing a Chapter 13 case rather than a Chapter 7.

So if you are a veteran receiving VA benefits, make sure you disclose your VA benefits to your bankruptcy lawyer even though they are not taxable and not garnishable.  Last but not least – if you are a veteran reading this, thank you for your service.

By Karen Maxcy

W M Law Attorney

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