Part of the mission of ABI’s newly formed Task Force for Veterans and Servicemembers Affairs is to “remediate and prevent adverse debt concerns and impacts on veterans and servicemembers to ensure that we financially strengthen those that strengthen us with the respect and dignity they deserve.” To that end, the Task Force has focused much of its initial attention on the Bankruptcy Code’s perplexing and inequitable treatment of veterans’ benefits in consumer bankruptcy cases.

While the Code excludes benefits received by individuals under the Social Security Act from the definition of “current monthly income” and thus from an individual’s “disposable income,” the Code inexplicably provides no comparable exclusions for benefits received through the U.S. Department of Veterans Affairs or otherwise on account of a veteran’s service. The disparate treatment of veterans’ benefits presents significant hardship to some veterans, compelling them to devote these benefits — including their disability benefits — to the funding of their chapter 13 plans and restricting their ability to seek relief under chapter 7 rather than under chapter 13.

Originally published in the ABI Journal - November 2018.