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HAVEN Act Protects Veterans' Disability Benefits During Bankruptcy

Posted on in Bankruptcy

HAVEN Act Protects Veteran’s Disability Benefits During BankruptcyMilitary veterans can be vulnerable to financial struggles after they return to civilian life. According to U.S. Census data:

  • Approximately 125,000 veterans filed for bankruptcy in 2017;
  • Veterans accounted for 14.7 percent of the people who filed for Chapter 7 bankruptcy; and
  • Veterans accounted for 15 percent of the people who filed for Chapter 13 bankruptcy.

Disabled veterans, in particular, may struggle to find and keep employment and often rely on their veteran’s disability benefits. A federal law enacted in August provides new protections from creditors for those disability benefits when a veteran files for bankruptcy. 


The Honoring American Veterans in Extreme Need (HAVEN) Act was signed on Aug. 23, after the bill passed both chambers of Congress with bipartisan support. The act states that specified federal disability payments for veterans will be excluded when calculating a bankruptcy filer’s income. Qualified disability benefits include:

  • Disability and death benefits paid by the Veterans Administration;
  • Special compensation for catastrophic injuries or illnesses;
  • Special compensation for combat-related injuries from the Department of Defense;
  • Disability severance pay from the DoD;
  • Retirement pay related to a disability; and
  • Survivors’ benefits paid to the family of a deceased veteran.

The HAVEN Act gives a veteran’s disability pay the same protection that Social Security disability benefits already had. However, some types of federal compensation are not covered in the law. A bankruptcy attorney can tell you whether your benefits qualify under the act. 

Effect of the Act

Bankruptcy filers must calculate their current monthly income (CMI) as part of the process:

  • For Chapter 7 bankruptcy, your CMI can determine whether you qualify through the Chapter 7 bankruptcy means test; and
  • For Chapter 13 bankruptcy, your CMI determines what level of payments you can afford to make to your unsecured creditors as part of your repayment plan.

Excluding your veteran’s disability benefits from your CMI may affect which type of bankruptcy you are eligible to file for and will protect those benefits when creditors collect from you during bankruptcy.

Contact a Denton County Bankruptcy Lawyer

Military veterans and their families receive federal disability benefits as compensation for the sacrifices that the veterans made while serving and protecting their country. If a veteran needs to file for bankruptcy, they should not have to worry about whether they will surrender those benefits to creditors. A Frisco, Texas, bankruptcy attorney at The Page Law Firm can explain how bankruptcy may help you get the fresh start you need with your financial situation. To schedule a free consultation, call 214-618-2101.


National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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