Special Rules for Veterans in Bankruptcy

Did you know that as a disabled veteran, there are special rules carved out for you within the bankruptcy laws?

Chapter 7 bankruptcy is the bankruptcy most people think of when they think of bankruptcy.  It gives you a fresh start; it wipes out all your debt.  In order to file a Chapter 7, debtors must pass the means test.  The first level of the means test looks at what your gross income was averaged over the six months prior to filing.  That number is then annualized and compared to what the median income in California is for your family size.  If you are more than the medium, then the long form means test must be completed, which takes into consideration deductions for what the IRS considers necessary expenses.

For a disabled veteran (more than 30% disabled) and the majority of your debts were incurred during activity duty, you do not have to pass the means test.  38 USC 3741. 38 USC 901(1).  This means that even if you fail the means test, you can still file for Chapter 7!   If you are a veteran, or know a veteran, that is having difficulty getting back on their feet after being deployed, please do not hesitate to contact us for a free one hour consult!

Comments 2

  1. I was looking into the bankruptcy options for me.

    I am 100% disablied according to the VA for my time in the Marines.

    I was was debt free until my back pain caused me to rely on a cane for 6 months. During this time my girlfriend had to stop her work and become a caregiver because i could hardly walk and required lots of care.

    During this time the VA said i was fine and I had to rely on credit card and my savings to pay for my own care. I did improve but now my debt is out of control.

    My disability check is spent by day 3 of the month on bills. I rely on free veteran food pantries weekly for food.

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