ABI - American Bankruptcy Institute

07/22/2019 | Press release | Distributed by Public on 07/20/2019 20:38

ABI Journal Article Highlights Need for Congress to Fix Code’s Inclusion of Veterans’ Disability Benefits in Chapter 13 Bankruptcy

Alexandria, Va. - An article in the July ABI Journal highlights the need for Congress to remove the disparity of veterans' disability compensation being included in the disposable-income calculation of chapter 13 bankruptcy, while Social Security disability income is exempted. 'Congress intended for VA disability compensation to have broader protections and exemptions than SSDI,' writes Jonathan S. Glover of the Stetson University College of Law (Gulfport, Fla.) in his article 'The Bankruptcy Code's Disservice to Those Who Served.' 'Unfortunately, this protection of VA disability compensation stops at the gates of chapter 13.'
Glover, a retired Army captain and student at Stetson University College of Law, won second place (sponsored by Wolcott Rivers Gates) in ABI's 2019 Bankruptcy Law Student Writing Competition with his article. He serves as an Equal Justice Works Fellow, and Stetson University College of Law's Veterans Law Institute is the host site for his fellowship, sponsored by Greenberg Traurig LLP and the Florida Bar Foundation.
Prior to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, both VA disability benefits and SSDI were exempted from disposable income in bankruptcy. After BAPCPA's enactment, SSDI remained exempt from consideration in chapters 7 and 13, but VA disability benefits were included in the disposable-income calculation of chapter 13 while being exempted from the means test in chapter 7. 'These funds are intended to remain out of creditors' reach,' Glover writes. 'The problem with including VA disability compensation in a chapter 13 disposable-income calculation is that if the debtor has the case dismissed or converted to chapter 7, or never files for bankruptcy protection, the VA disability compensation cannot be attached or garnished by creditors. The inconsistency highlights the irrationality of requiring only chapter 13 debtors to include veterans benefits as income payable to creditors.'
In addition to calling for VA disability benefits to be exempted in chapter 13, Glover cautions that attorneys who decide to represent veterans should understand veterans' benefits, because a disabled veteran might need more help besides bankruptcy. 'Attorneys should take extra time to get a veteran's background and history so that no stone is left unturned,' Glover writes. 'Proper representation for veterans will give them the best opportunity for success and might avoid bankruptcy altogether.'
'It is our duty as legal scholars, practitioners and professionals to continue the fight, take note of inequities and do whatever it takes to protect those who have protected us,' he concluded.
To obtain your copy of 'The Bankruptcy Code's Disservice to Those Who Served,' please click here.
Members of ABI's Veterans' Affairs Task Force have supported the 'Honoring American Veterans in Extreme Need Act of 2019' (HAVEN Act) to exempt veterans' disability from consideration of bankruptcy's means test. The bill was included in both the Senate- and House-passed versions of the National Defense Authorization Act for 2020 (the NDAA). If not passed sooner as a standalone bill, the HAVEN Act should be part of the final version of the NDAA that will eventually become law. Once the Senate and House have reconciled differences in each of their respective versions of the NDAA, it will go to the White House for signature. Meanwhile, efforts to enact the HAVEN Act on a standalone basis continue by Task Force. The House Judiciary Committee 'marked up' the HAVEN Act on July 11 and reported it to the full House without any proposed amendments to it.
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abi.org/education-events.
Monday, July 22, 2019