Means Test Exception – Disabled Veteran


Disabled Veteran Means Test Exception

Another means test exception is carved out for a disabled veteran.  With all the sacrifices our military men and woman make, this is a powerful one that can really help their families and future.

Brief Summary of Means Test

Just in case you didn’t read our prior post on the business debt exception to the means test, the means test is a way for the Court to determine if someone is eligible to file a Chapter 7.  Chapter 7 is the bankruptcy where you simple get rid of all your debt.  In order to qualify, the means test looks at what your gross income prior to filing is, averages, than annualizes it and compares it to what your family size median income is.  If you make less than the median, you qualify.  If you make more than the median, then you’ll have to do the long form version of the test.

If you’d like more information on bankruptcy in general, click here.

How to Qualify for the Exception? (See 11 USC 707(b)(2)(D))

  1. Disabled Veteran

(a) You are receiving veteran disability compensation by being at least 30% disabled; or

(b) you have been discharged from service, or released from active duty, because of “a disability incurred or aggravated in line of duty” (28 USC 3741) ,


2. Your “indebtedness occurred primarily during a period” in which you were either:

(a) On “active duty” meaning “full time duty in the active military service of the United States” (10 USC 101(d)(2)); or

(b) “performing a homeland defense activity”. (32 USC 901(1))



Obviously this is a powerful exception with specific requirements to them.  Should you believe you may qualify for this exception, please do not hesitate in contacting Seneca Law for a free 30 minute consult.  Get all the information you need before making any decisions.

Comments 1

    My name is Ronald Jensen. I am a 100-percent service connected, honorably discharged U.S. military veteran from the Vietnam War era who wishes to file an adversarial bankruptcy proceeding in federal court against USAA bank. I was told by a fellow veteran that I should file in federal court because state courts do not always recognize federal laws concerning the rights of disabled veterans. A former Navy Seal, he went through a similar situation I am about to describe and won his case. So I am writing to your law firm because you seem very familiar with the special rights of veterans in bankruptcy proceedings.
    I am a US citizen and former San Diego resident who now lives in Ensenada, Mexico. I am 74 years old and have more than $50,000 in unsecured debt in the U.S. due to high medical care expenses incurred on both sides of the U.S.-Mexico border. These expenses are mostly the result of a stroke I suffered in Mexico and other circumstances related to (a) poor medical care from the VA in San Diego; (b) flawed policies that make it difficult to access VA health care on a regular basis in San Diego; (c) the VA will not reimburse veterans for medical care in Mexico; and (c) the VA was unable or unwilling to provide the care I was told by my Mexican physicians that I needed during this emergency, which included lifesaving hyperbaric oxygenation therapy.
    In December of last year my computer system was hacked and destroyed completely. Simultaneously, attempts were made by unknown persons to make unauthorized charges of more than a $1,000 on my Barclay Bank Credit Card. Fortunately, the Barclay fraud detection unit was on its toes and immediately blocked the transactions. At the same time. fraudulent activity occurred on my USAA checking account where I receive my income by direct deposit from the VA and Social Security. However, I did not spot this fraudulent activity it at the time because I no longer had on-line access to USAA bank, nor was I advised by USAA bank that this fraudulent activity occurred.
    When I got a new computer and was able to go back on line in February, I reviewed my USAA account and found numerous unauthorized withdrawals from Mexican banks in Ensenada that would have been physically impossible for me to make for several reasons:
    • I withdraw my USAA funds in Mexico from Mexican ATMs that dispense the cash in pesos.
    • I have a daily limit of $610 or its equivalent in pesos. Once I reach that limit on any given day, no ATM on either side of the border will issue more funds.
    • I cannot use my USAA debit card or any other US financial instrument to withdraw money from a Mexican bank teller or conduct any other type if financial transaction with a Mexican bank.
    • The only financial transaction Mexican banks will authorize is an ATM withdrawal that does not exceed the $610 daily limit set by USAA bank.
    On December 29 last year more than $1,500 was withdrawn from my USAA checking account at two Mexican banks — HSBC and Bancomer. A month later, more than $1,100 was withdrawn from these two banks on the same day, and I reported the same to USAA bank. All in all, the total amount stolen from my account was about $3,500 ( I have the exact records and figures available on my USAA bank statements) and I reported all of this to USAA bank. However, USAA bank mishandled the investigation from the very get-go. At one point they did return more than $500 to my account, stating by email that it was as a permanent refund based on their own finding that fraud did occur. Then they returned an additional “adjustment credit” of more than $1,700, which I promptly spent because I was very short of funds due to all the money stolen from my account.
    Then, in April USAA bank reversed its position and advised me that they had checked with the Mexican banking institutions in question, and that those banks said the transactions were all “authorized.” They said that if I had any questions, or wished to dispute their findings, I should check with the Mexican banks in question, which I did. The Mexican banks promptly advised me, however, that (a) they do not provide this type of information to outside clients; and (b) it is the responsibility of USAA bank, entirely, to resolve this type of dispute and provide all necessary information and documentation.
    USAA advised me that if I wanted copies of the findings of these Mexican bank institutions relative to my case, I should write to USAA bank and they would provide them. So I sent them a letter a couple of months ago and never received a reply. USAA also sent me emails inviting me to call Jennifer Cole, the person who handled (or “mishandled,” I should say) my claim. I left her several messages to call me and she never called back. I not only left messages which were never answered, and I also sent an email, based on the advice of another USAA bank representative I spoke with, and neither Jennifer Cole or anyone else from USAA bank replied.
    Meanwhile, I began receiving harassing phone calls — sometimes as many as 3 or 4 calls a day, including Sunday evenings — from USAA bank demanding payment for a past due secured loan on my 2008 Jeep Patriot. In fact, I have been unable to pay the loans on both of the secured accounts I have with USSA for the two vehicles I purchased — a 2002 Nissan Pathfinder 4×4, on which I owe $2,100 and change, and the 2008 Jeep Patriot in which I owe more than $6,000.
    Then, last April, USAA demanded that I return the $1,700 (plus change) so-called “adjustment credit” by April 23 or they would seize it from my account. I was unable to pay this amount and I advised them repeatedly of the circumstances I have described herein that triggered my inability to pay them, all to no avail.
    What’s more, based on their threat to seize my disability compensation, I explained on numerous occasions that it is illegal, under the Veterans Disability Protection Act of 2010 and 2012, for any bank or creditor to seize a veterans disability compensation or assets without due process. However, it was all to no avail. I might as well have been talking to a brick wall. Not only did USAA bank improperly list my disability compensation as “retirement income” knowing full well that VA disability compensation is not considered “income,” on May 1 then seized the entire amount from my VA direct deposit, leaving me destitute and unable to pay my bills and seek urgently needed medical care. Needless to say, this situation has been very aggravating and dangerous to my health and safety. I suffer from Post Traumatic Stress Condition for which I am rated 100-percent service connected and disabled by the VA. I also have an additional rating of 10 percent for tinnitus, which I only learned about recently because of VAs flawed procedures and inability to pay its bills.
    Both vehicles have now been sent to outside collection agencies and, although USAA has closed my checking account and I no longer receive calls from them, I continue to receive harassing phone calls and repossession threats from those outside collection agencies. I have asked them not to call and have explained that I have been sick in bed and unable to travel, but at my earliest opportunity I will seek legal advice in San Diego. Nevertheless, they continue to call.
    When I was able to travel last month and checked with a bankruptcy attorney in Chula Vista, and another in San Diego, they both advised me that if I file bankruptcy proceedings I could lose my home in Mexico. So I want to know where I stand, and what I should do, based on competent legal advice from a lawyer who is familiar with veterans rights.
    I have all the bank records and emails and letters in question and would like to schedule a consult for anytime after 4 p.m. on Thursday, August 2, or Friday morning, August 3, if you feel you can help me with this matter on an equitable and affordable basis. I am open to any and all suggestions as to the best options to follow.
    Please feel free to call me at home today if you have any questions.
    Thanks for your interest and attention,
    Ronald W. Jensen
    Majic Jack phone that rings into Mexico: 619-752-5969
    Mexico cell phone: (011521) 646-189-6040

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