The Haven Act changed bankruptcy law in 2019. It stands for “Honoring American Veterans in Extreme Need.” This law protects veterans during financial hardship. It ensures that disability benefits remain safe. Before this law, veterans faced unfair treatment in court.
What is the Haven Act?
The Haven Act treats veteran benefits like Social Security. Most people keep their Social Security in bankruptcy. Veterans previously had to count disability pay as income. This often forced them into longer repayment plans. Now, the law excludes these benefits from “current monthly income.”
The Haven Acts Impact on the Means Test
The means test determines your bankruptcy options. It looks at your income over six months. If your income is too high, you cannot file Chapter 7. High income forces you into Chapter 13 instead.
The Haven Act removes specific benefits from this calculation. These include VA disability and certain pension payments. By lowering “official” income, more veterans qualify for Chapter 7. This allows for a faster fresh start.
Haven Act Protection in Chapter 13 Plans
In Chapter 13, you pay creditors over three to five years. Your “disposable income” determines your monthly payment. Higher disposable income means higher monthly costs.
Because of the Act, disability pay is not disposable income. Veterans can keep more of their monthly benefits. This money helps cover healthcare and basic needs. It provides a vital safety net for families.
Excluded Benefits Under the Law
Not all military pay falls under the Act. It specifically targets disability-related income. Here are common exclusions:
- VA disability compensation.
- VA dependency and indemnity compensation.
- Disability severance pay.
- Combat-related special compensation.
Retired pay for length of service is still counted. You should review your pay stubs carefully.
Why the Haven Act Matters
The Haven Act promotes fairness for those who served. Veterans often have unique medical costs. They should not lose disability pay to creditors. This law recognizes the sacrifice of service members. It aligns military benefits with other federal protections.
Filing for Bankruptcy Today
If you are a veteran, the Haven Act is your ally. It simplifies the filing process for many. You may find relief more quickly than expected. Always consult with a qualified bankruptcy attorney. They can ensure your benefits stay protected. It offers peace of mind to those in debt. Your service benefits are finally secure in court.