Bankruptcy and Va disability in Veteran Finance & Tax Related Issues Forum

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Bankruptcy and Va disability

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edub10304

Bankruptcy and Va disability

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Posts: 571

Dec 3 08 12:33 PM

Ok , I am a little concerned now. Alot has gone on in the past year(Divorce, Facing Foreclosure) I am consulting a lawyer to possible file for bankruptcy. I see VA benefits are exempt but it is still included in your budget that determines if you can file Chap 7 or 13. My concern is I have claims pendiing that I filed on 23 Oct 08. If I get this money before my Bankruptcy closes, it can alter the terms of the budget and I may have to file 13 instead of 7, which would put me on a payment plan instead of total liquidation.

Is it reasonable to think the claim would be decided that quick? I filed for 7 conditions and I am a OIF Vet but I have been out of service for 18 months. If I submit new evidence which I have since I am being seen for my conditions almost weekly will it slow it down? I am torn thinking I am trying to get over but VA is exempt from garnishment but essentially can affect the outcome of the Bankruptcy even though it is future earnings.

Any opinions?

Ed

Chew your meat for you, pass it back and forth from my mouth to yours in a passionate kiss because I like you

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sonicbuffalo

#1

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Posts: 1182

Dec 3 08 12:56 PM

Hi Edub,

I doubt your claim will be decided that quickly, but that's my guess. As far as submitting new evidence, yes, it will slow it down some to the best of my knowledge. Hope this helps.

sb

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dean9908

#2

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Posts: 7475

Dec 3 08 1:05 PM

I'm with SB,

I'd almost be willing to bet 16 months of retro that it wont be done lol

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Duped

#3

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Posts: 786

Dec 3 08 1:12 PM

Good luck!

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edub10304

#4

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Posts: 571

Dec 3 08 1:13 PM

I think you are trying to trick me, if I take that bet and it comes faster it may mess me up, if it doesnt I have to pay you. I lose both ways!!!

Ed

Chew your meat for you, pass it back and forth from my mouth to yours in a passionate kiss because I like you

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rearnold

#5

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Posts: 421

Dec 3 08 10:30 PM

I may be wrong, but I think I read somewthing somewhere that even after the case is closed, you have to notify the court of any extra money you received. But I do known in state of Texas, SS, retirement, Va, is not consider income for bankrupes.

But you need to let our lawyer, and one more piece odvise don"t hide anything from your lawyer. It will only bite you in the ass.

Bob Arnold

100% IU P&T

Edited 1 time by rearnold Dec 3 08 10:32 PM.

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cng1

#6

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Posts: 732

Dec 3 08 10:37 PM

Maybe if you do get the back payments you will be able to pay off your debts, rather than bankrupcy.

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Ilyanir

#7

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Posts: 2039

Dec 3 08 11:18 PM

edub10304, I'm by no means an expert but I don't think that they are going to be seeing to garnish your VA entitlement backpay. In all actuality it's money that you already owe most likely like I do to friends, family members, etc. who have sacrificed and helped you down this long and arduous claims process. Also, if it's a large enough chunk of money you can either pay off your home loan and be exempt that way or you can buy land and start building a home and be exempt. That's what I am going to do with my backpay if I ever get any from the VA for my claims. All I want is a few acres, 5 at least to grow a small garden, have some privacy and be somewhat self-sufficient.

The best thing to do is to ask an attorney, if you are retired military you can go to the bases JAG office and ask one of the lawyers there but a civilian lawyer will usually give you information without obligation as to what route you need to take. Hope this helps.

Make sure you check and see what your states homestead laws are and if they have one.

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edub10304

#8

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Posts: 571

Dec 4 08 6:59 AM

I have a Lawyer. They cannot garnish the VA but they use a budget to determine if you can pay back debts in Chap 13 or I can just wipe it clean if I am below the threshold. I did tell my Lawyer everything, I am not trying to hide anything, this would cause more problems. I would pay back the debts if I could. I have held out as long as as I could. I lasted 1 yr paying everything at the expense of me eating ramen for breakfast lunch and dinner. Calling in sick because I couldnt pay for gas to get to work when gas was $4. This was my last option and I finally got to the breaking point. Couldnt shuffle it around any longer. My ex wife left me 3 months after purchasing our 1st home once I got out of the Army and we had 100% financing. I stayed afloat as long as I could.

Ed

Chew your meat for you, pass it back and forth from my mouth to yours in a passionate kiss because I like you

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SNAFU315

#9

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Posts: 11

Dec 4 08 12:19 PM

I live in Florida and this only applies here. Each state has its own policy's. VA or SS disability cannot be garnished for a bankruptcy or for a judgement against you. You have to include those monthly amounts in your means test but you are then able to subtract them to arrive at your final income. For most of us, that would be an automatic ch 7 unless you are filing jointly with your working spouse, whose income would be counted. If she makes a decent wage, you might have to go with ch 13 and make payments based on final income. Good luck Snafu315

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missvet

#10

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Posts: 5

Dec 5 08 1:26 PM

Just a little info for you. If you take the means test you will be able to tell exactly where you would be at income wise for your bankruptcy. The laws changed in 2005. If the majority of your debts were incurred while you were active duty military AND you recieve VA Disablity than that income DOES NOT count on the means test or as a source of income.

If you did not incur most of your debt while active duty than it WILL COUNT for both income and on the means test. that being said if you are over the median income based on your state...not sure what state you are in than you maybe looking at a CH 13. Also are you current on your house and car payments?? If you are behind the best bet is to file Chapter 13 so you can catch up on those. The mortgage company/car company does not have to reaffirm your debts if you file Ch 7.

One more thing when the new laws went into effect in 2005 if you have as little as 100/mo left over after paying for NECESSITIES and you are OVER the median income you will pay something back to your creditors. The new laws are more complicated than they need to be. Here are some links that my help you...the means test is where I would start.
www.legalconsumer.com
http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

Hope this helps you.

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edub10304

#11

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Posts: 571

Dec 6 08 12:43 AM

Yes, this I already know. I am below the means test. I liv ein Georgia, I am not keeping my house, I am 4 months behind. I am in the negative after expenses but potential VA money form my pending claim may put me at +100 after expenses hence it would be changed to a 13. The fact is thoguh you cant tell what the VA will do or when they will do it so it is not certain I will egt a dime and it may not be decided for over a year too so it wouldnt matter anyway.

Chew your meat for you, pass it back and forth from my mouth to yours in a passionate kiss because I like you

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missvet

#12

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Posts: 5

Dec 6 08 1:04 PM

Well there shouldn't even be a question file for a Ch 7 immediately. If you don't want to keep your house. If you want to keep the house you would do a Ch 13 to take care of the arrears. Good luck.

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elstx

#13

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Posts: 3

Jan 3 09 12:14 AM

If you are 30% or more disabled, you do NOT have to do the Means Test.

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sea2fish

#14

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Posts: 1680

Jan 3 09 10:40 AM

Chapter 13 is the route I took, the house and truck are paid off in the coming Spring. Just make those payments on time. I to live in GA.

sea2fish

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winkeye

Severance Pay Tax Assistance! Please help!!!

#15

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Posts: 2

Jan 6 09 11:34 AM

Hello everyone, I would like to start off by saying thanks for having this awesome site and I also hope that I can get some assistance with my current situation please.

I was recently separated from the USAF on June 2008 for "Severe back issues" (ie. Chronic back pain, Herniated discs, Severe arthritis, etc...) and was awarded a Severance pay in the amount of $64K before taxes and around $48K after taxes.

I recently received a disability rating of 30% from the VA on November 2008 (I live in the Philippines so maybe that's why it was quicker). I am filing a rebutal/disagreement letter with the VA as they incorrectly calculated my rating and also left out some other conditions which should increase my rating (but 20% was rated for my back issue and another 10% for another condition)

My main question and concern is that I am hoping someone out there can assist on what I need to do to receive the Severance pay taxes back that where witheld from my Severance pay (around $16K)? I am confused on reading through the other articles in here and just wanted to know what the process was (what to do, what to file, where to file, etc...)??? Basically everything from start to finish.

If you have any further questions please let me know.

Thanks in advance for the information, I really appreciate it.

Scott Stone
USAF Disabled Veteran

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edub10304

#16

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Posts: 571

Jan 6 09 11:46 AM

winkeye wrote:

Hello everyone, I would like to start off by saying thanks for having this awesome site and I also hope that I can get some assistance with my current situation please.

I was recently separated from the USAF on June 2008 for "Severe back issues" (ie. Chronic back pain, Herniated discs, Severe arthritis, etc...) and was awarded a Severance pay in the amount of $64K before taxes and around $48K after taxes.

I recently received a disability rating of 30% from the VA on November 2008 (I live in the Philippines so maybe that's why it was quicker). I am filing a rebutal/disagreement letter with the VA as they incorrectly calculated my rating and also left out some other conditions which should increase my rating (but 20% was rated for my back issue and another 10% for another condition)

My main question and concern is that I am hoping someone out there can assist on what I need to do to receive the Severance pay taxes back that where witheld from my Severance pay (around $16K)? I am confused on reading through the other articles in here and just wanted to know what the process was (what to do, what to file, where to file, etc...)??? Basically everything from start to finish.

If you have any further questions please let me know.

Thanks in advance for the information, I really appreciate it.

Scott Stone
USAF Disabled Veteran

When you were discharged you should have gotten a packet explaining all this. Send me a msg on here with your email and I can scan you all the Docs you will need to get this done. You basically have to write a letter to DFAS and include your VA rating letter. There is a different process if you are asking for the refund in a different tax year than the severence was given which I think is the case here for you.

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winkeye

Reply to EDUB10304

#17

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Posts: 2

Jan 11 09 10:46 AM

Hey,

Thanks for the quick reply. I have been out of reach of a computer for a couple of days so I apologize for the delayed reply.

I had never received any information on any of this prior or after discharge so any advice, words of wisdom, etc... will be greatly appreciated!

My E-mail address is (winkeye_2000@yahoo.com)

Also, to clarify the short situation again.....I was medically separated from the USAF on June 2008 and received my initial VA rating on November 2008....so all in the same tax year. I just need to figure out how to file my taxes this year (once I receive my W-2) and to receive the taxes that were taken out of my severance pay.

Thanks again EDUB!

Scott Stone

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cybrbzy

MEANS TEST & VA DISABILITY COMPENSATION

#18

[-]

Posts: 2

Jan 9 10 11:22 AM

Does anyone know of any new information which exempts VA disability compensation to be included in the means test as income. I think the new law is a double edged sword. We don't have to include our disability income on our taxes why should we include it on the means test as income?

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cybrbzy

TAXES AND SEVERANCE PAY

#19

[-]

Posts: 2

Jan 9 10 11:33 AM

The same happened to me when I was discharged under disability and received severance pay. It was BS that the military taxed my severance pay and I had to do the leg work to get the money back when I filed taxes. And, it only gets better. The VA holds a percentage of my compensation to pay back the severance that the military gave me when I was discharged. But to answer your question...There is a form you fill out when you file taxes along with you have to write a letter, provide a copy of your DD-214 which shows severance pay and your LES that shows the taxes that were deducted from your pay. Under US Code 38

TITLE 38 > PART IV > CHAPTER 53 > § 5301

§ 5301. Nonassignability and exempt status of benefits

(a)

(1) Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. The preceding sentence shall not apply to claims of the United States arising under such laws nor shall the exemption therein contained as to taxation extend to any property purchased in part or wholly out of such payments. The provisions of this section shall not be construed to prohibit the assignment of insurance otherwise authorized under chapter 19 of this title, or of servicemen's indemnity.

Here's a website to go for further info: http://www.usvetinfo.com/meddischarge.htm

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roy1

roy1 g co. 2/3 bastards from the sea.usmc missvet i would chew your meat lol

#20

[-]

Posts: 3

Jan 17 10 7:59 PM

missvet wrote:

Just a little info for you. If you take the means test you will be able to tell exactly where you would be at income wise for your bankruptcy. The laws changed in 2005. If the majority of your debts were incurred while you were active duty military AND you recieve VA Disablity than that income DOES NOT count on the means test or as a source of income.

If you did not incur most of your debt while active duty than it WILL COUNT for both income and on the means test. that being said if you are over the median income based on your state...not sure what state you are in than you maybe looking at a CH 13. Also are you current on your house and car payments?? If you are behind the best bet is to file Chapter 13 so you can catch up on those. The mortgage company/car company does not have to reaffirm your debts if you file Ch 7.

One more thing when the new laws went into effect in 2005 if you have as little as 100/mo left over after paying for NECESSITIES and you are OVER the median income you will pay something back to your creditors. The new laws are more complicated than they need to be. Here are some links that my help you...the means test is where I would start.
www.legalconsumer.com
http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

Hope this helps you.

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