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VA Disability

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  • VA Disability

    Hello, I think I may have a problem. I filed for Chpt 7 on September 28th and our 341 meeting is on Nov. 3rd. My wife and I were under the income limit by about $3000. Well today, I was paying my bills and noticed a $17000 deposit in my account from the US Treasury. After calling the bank and US Treasury, I discovered it was more than likely back pay for VA disability. The Treasury rep said that she did not know the full details until the deposit clears, which should be tomorrow. I started my compensation about a year ago and apparently, once the determine your percentage, they backpay you to the day you first filed. The doctor said that my rating should be about 60%. I've tried to call my attorney and can't get ahold of anybody. Am I screwed now? Since we are keeping our car and house, can I use it to pay off my SUV and pay down my house? Thank you.

  • #2
    At this time, do not panic. If this is back pay for a benefit due to you, and it is an exempt item that you would or should have been getting, I don't think it is attachable. This is much like life insurance, you need to have it, but you don't want to use it. I believe you will find it to be exempted. It is BACK PAY. 'Hub
    If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

    Comment


    • #3
      If you have received a lump sum payment for the disability benefits while you are in the bankruptcy proceeding, you may be required to pay a portion of the lump sum to your creditors. But this depends on the exemption laws of your state.

      http://www.bankruptcylawfirms.com/re...ility-benefits

      'Hub
      If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

      Comment


      • #4
        Check out this thread. http://www.bkforum.com/showthread.ph...A-compensation
        Filed August 20 341 on September 23 Report of No Distribution - September 24 Case Discharged and Closed on November 23!!!

        Comment


        • #5
          We were in a similar situation... except we had NOT filed yet. Planned to file in April and along came the back payment in March (more than a year after we had applied for VA disability). Our attorney considered filing in March so we would not have to report it as income, but while the disability payment was exempt, in our state, we could have no more than $200 cash on hand the day of filing and it takes time to spend down that much money. He also advised us to NOT pay additional on house, car, etc, but to find needed repairs, stock up on groceries, dental, glasses, you get the picture. Talk to your attorney. Since you have already filed, it seems like it will be a non issue.

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          • #6
            Well, spoke to my attorney and she said it may force us into CH 13, which makes no sense to me. She asked me why I had not listed it on the worksheet and I told her I had not received a penny from them and had no idea I would recieve any monetary payment at all. I just wanted the healthcare and medication portion covered. I hope she was confused, surely she realizes it's a crapshoot whether you'll recieve anything. I'm going to go down and talk in person, I just don't see how they can prorate something into your budget that was never there before you filed. This is so frustrating.

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            • #7
              I think the problem you'll have is that at 60% VA rating, you're looking at around 12,000 a year increase in income that most definitely can be used to fund a chapter 13. Hopefully your attorney can find a way around this or you can amend your expenses to account for this extra income. I know that VA compensation does count as income. Best of luck.
              Filed Chapter 7 (no Asset) - Sept 2009
              341 Meeting - Oct, 2009 (Converted to Asset Case)
              DISCHARGED - Dec. 2009
              $1500 Buy Back & 67% Of Tax Refund Surrendered

              Comment


              • #8
                Hi keystone, maybe this would help:

                Title 38, Chap 53 §5301(1)(b) clearly exempts VA disability benefits: b) shall not be assignable except to the extent specifically authorized by “federal” law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, to include civil and bankruptcy court, either before or after receipt by the beneficiary

                Congress, in their infinite wisdom specifically mentions SSA benefits but not VA benefits in the means-test.

                The other factor in your favor is that the means-test specifically includes the 6 months prior to filing, that's it. The trustee would need to invoke the "totality of cirmcumstances" and your lawyer would have to counter that.

                Some people in online vet forums make the arguement that VA disability is not income, they get their support from language in Title 38, not Title 11 You might want to consult with a lawyer who specializes in Vet, VA, Title 38 issues.

                Hope this all works out for you, and thanks for serving!

                Tom in Colo
                Ch7 filed 5/12/2010.....341 meeting 6/30/2010....report of no distribution 8/15/2010.....discharged 10/01/2010.....closed 11/09/2010

                Comment


                • #9
                  Thank you Tom for the help, I'm going to take it to her. In addition to it being exempt, my problem was with what you mentioned about the 6 months prior to filing. My wife lost her job about a year ago and was unable to find employment which is the biggest reason for us not being able to pay on the credit cards. I told our attorney about her seeking a job and she told us to wait until after we filed to take any job should she be lucky enough to find one. I just don't see this as any different. Although this would be a great blessing to our financial situation, if it came to it, I'd have no problem giving the lump sum this to pay down some of the cc's that we have been able to pay on. I find it ridiculous that they could add the future monthly payments into our budget prior to filing.

                  Comment


                  • #10
                    Well I had my 341 meeting today and thank God everything went great! I was a little worried, my wife appeared in person and I appeared telephonically due to being on a business trip. My attorney answered the question about any changes in financial situation, and he only asked if everything was due to military disability. The most lengthy question was about how I determined my home value(which I'm keeping) and I told him. He told my wife and I good luck. My wife said the attorney told her we're home free. Hoping we get the Notice of No Distribution soon, that will be a relief. I already feel better and think I will actually be able to sleep tonight.

                    Comment


                    • #11
                      Got my Report of No Distribution on Pacer today! Thank God!

                      Comment


                      • #12
                        Glad to hear this, Congrats. I know it feels great to have that weight lifted off your shoulders.
                        Filed Chapter 7 (no Asset) - Sept 2009
                        341 Meeting - Oct, 2009 (Converted to Asset Case)
                        DISCHARGED - Dec. 2009
                        $1500 Buy Back & 67% Of Tax Refund Surrendered

                        Comment


                        • #13
                          Congratulations keystone58 !!

                          Got my Report of No Distribution on Pacer today! Thank God!

                          YEA!!!!!!!!!!!!!!!!!!!!!!!

                          Tom in Colo
                          Ch7 filed 5/12/2010.....341 meeting 6/30/2010....report of no distribution 8/15/2010.....discharged 10/01/2010.....closed 11/09/2010

                          Comment


                          • #14
                            Just wanted to thank everybody for their help on here. It was mainly this forum that gave me the courage to declare ch. 7 last November, well it finally got discharged 2 weeks ago and cannot tell you how much stress is off my shoulders. My wife and I are working alot more hours, don't see each other quite as much and our marriage is better than ever since we declared and the phone calls stopped, it's amazing the stress debt puts on you.

                            Comment


                            • #15
                              Congratulations again!!

                              Awesome news keystone, thanks for the update!!

                              Made my day.....

                              Tom in Colo
                              Ch7 filed 5/12/2010.....341 meeting 6/30/2010....report of no distribution 8/15/2010.....discharged 10/01/2010.....closed 11/09/2010

                              Comment

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