va disability benefits

[jec]

are va disability payment benefits exempt from being counted as income

[pv34pv3p]

If I recall correctly VA disability waives the means test. However, like military retirement, you still have to list it as income, but it's exempt from being attached...which didn't make much sense to me.

I guess is if ya had enough disposable income...they could force a 13 but not factor the exempt income into it...

I wasn't close enough to have it make a difference...

Hope this correct and helps.

pv34pv3p

[lrprn]

are va disability payment benefits exempt from being counted as income

"Military retirement pay/pension (not federally protected) is considered income by the IRS and is taxable. However, VA disability compensation (federally protected) is non-taxable, and is not considered income by the IRS." (from http://www.jerebeery.com/press%20rel...rty%20four.htm )

[CPO]

V.A disability is not taxable, and not attachable by any creditor.

However, at least in my case, it was still considered income as far as Schedules I and J are concerned and was also included in the means test calculation.

About the only thing up for dispute on the means test is unemployment insurance, which reverts to local rules. (Some argue that since unemployment insurance was authorized by SSI, it's exempt. No precedent has been set yet, and there is even a special box on the B22 that you check if you make this dispute).

My unemployment benefits were listed as income here in Texas as was my military pension and V.A. disability.

But they are all "judgement proof."

Sorry, I know what you were thinkin...'

Best regards and thanks for your service.

CPO

[pv34pv3p]

Here's a snip from one of HHM's reply to a similar situation.

"The "asset" of disability is your right to recieve the disability income, and that is exempt. However, the "income" of disability is a factor in determining your disposable income."

Gotta wonder what would happen if you had 500 disposable income and recieved 500 VA benifits?


pv34pv3p

[jec]

va disability

I am kind of confused. How can the va disability pay be exempt and still counted as income. Does anyone know anymore info on this

thanks

[HHM]

I am kind of confused. How can the va disability pay be exempt and still counted as income. Does anyone know anymore info on this

thanks

Frankly, no one else understands it either, but it is a case of legal hair splitting. The point of the new BK law was to determine if a debtor had "any" ability to pay back at least something to their creditors. So, in that respect, "any" and "every" source of income (money) is considered in the means test, even if that money (i.e. the right to receive that money free from creditor garnishment) is exempt.

Think of this, in all states, part (and sometimes all) of your employment income is exempt, but you still list all your employment income in the means test...you don't get to back out the exempt portion of your employment income from the means test; hence, it is no different with other types of recurring income (i.e. va benefits, disability benefits, SSI, etc).

What you need to understand is that determining what "assets" are exempt and non-exempt, and what your disposable income is, are two different tasks within BK.

Here is how it typically works....
Let's say, at the time you file BK, you have $800 in your checking account, but all that money is directly traceable to SSI income, as such, since the money in your checking account is directly traceable to SSI income, that cash is "exempt", meaning the trustee (who stands in place of ALL your creditors) cannot take it. However, the SSI (i.e. your right to receive SSI) is a source of regular, recurring income that you have been receiving over the last 6 months (lets assume so anyway). As such, that income is a factor in determining whether you have disposable income in determining whether you qualify for a chapter 7 or not.

At this point, it is not really important that you understand "why", you have larger and more immediate issues to deal with.

[CPO]

I am kind of confused. How can the va disability pay be exempt and still counted as income. Does anyone know anymore info on this

thanks

It's exempt from garnishment and attachment by your creditors or the trustee....

(ie, generally nobody can take it from you or force the .gov to pay them your benefits...)

But, it's still income to be used in determining your financial status under BK laws.

I know it's confusing and makes little sense, but you are probbaly used to that as a vet......

So, you can count on it as income through your BK period as nobody can take it, but understand that it IS income and will be figured as such when determining your income/debt ratio and your "means test" position. The trustee can't touch it.

Which reminds me, if your freakin' over the fact that this income may push you over the top as far as the "means test" is concerned, don't.

The "means test" DOES NOT determine your suitability for BK7. It is only a calculation used to determine if your ABUSING the BK system because of high income.

Your schedules I and J, which is where you determine your actual financial position, is what will really determine if your a BK7 candidate.

You can be well within the "means test" and have enough income left over that a BK7 is not possible. You have too much money left over after you pay your bills.....therefore the trustee will object.

And, you can be far above the "means test" threshold, presumed to be "abusing" BK7 by filing for it and yet be a perfect BK7 candidate because your income to debt ratio is so low that you cannot possibly pay your creditors. The trustee has no argument for abuse.

This can be confusing, but we are here to help.

Regards,

CPO

[pv34pv3p]

Snipped from this link:

http://www.qcbankruptcy.com/2005BankruptcyOutline.html

“Disposable Income” requirements.


If a Chapter 13 plan repays all debts in full, it is not necessary to pay all disposable income, but if the plan does not pay all debts in full, then all disposable income must be used to pay the plan. This includes money from a pension plan, even if it is ERISA-qualified. Taylor v. U.S. (In re Taylor), 212 F.3d 395, 396 (8th Cir. 2000), cert. den’d, 531 U.S. 1010, 121 S.Ct. 564, 148 L.Ed.2d 484 (2000). Military retirement income is also “disposable income.” Regan v. Ross, 691 F.2d 81 (2d Cir. 1982); In re Morse, 164 B.R. 651, 655 (Bankr E.D. Wash 1994). The new law will require all disposable income, unless the Chapter 13 plan is even paying interest to the unsecured creditors. Sec. 1325(b), as amended.

Sure sounds like they're making exempt income non-exempt to me...

It doesn't specifically mention VA Disability....and my lawyer just shrugged his shoulders...But like I said, I was just under the means and disposable and it didn't matter...but it did have me kinda nervous for a day or two...cuz like I said...it was close...

Just make sure you get as many nickles and dimes as ya can in yer expense column and don't forget things that need attention that you've been neglecting cuz ya didn't have the $$.

Hope this helps...

pv34pv3p(Prefers living medium to large or small...)

[jec]

va disabilty

so the lawyer yesterday

va income does not count for the means test but it does count as income when you are doing your budget