The Honoring American Veterans in Extreme Need Act, or HAVEN Act, was signed in effect by President Trump on August 23, 2019. The Act was supported by both Democrats and Republicans in both the House and the Senate.

The Act protects federal Department of Veterans Affairs (VA) and Department of Defense disability payments. Before the passage of the HAVEN Act, these disability payments were included as part of a debtor’s disposable income when a veteran filed for bankruptcy. This meant that veterans who filed for bankruptcy could lose this money to creditors.

Not all federal payments have been included as income during a bankruptcy filing. Federal social security payments, for example, are protected from creditors. The 2019 HAVEN Act means that veterans’ disability payments now have the same protections as social security disability payments.

This is an important change as 25% of United States veterans currently receive disability benefits. Additionally, 15% of people who have filed for personal bankruptcy (either Chapter 7 or Chapter 13) are veterans according to a 2017 study by the Center for Economic Studies (CES).

Which benefits are protected under the Haven Act?

Veterans will be happy to know that the list of which VA and Department of Defense disability payments are protected when filing for bankruptcy is long. These benefits include veterans’ pension, combat-related special compensation, dependency and indemnity compensation and the following:

  • Permanent and temporary disability retired pay
  • Temporary disability retired pay
  • Retired or disability severance pay for pre-existing conditions
  • Disability severance pay
  • Survivor benefit plan for Chapter 61 retirees
  • Special survivor indemnity allowance
  • Special compensation for assistance with activities of daily living
  • Veterans’ disability compensation

To find out more about how bankruptcy may affect you as a United States military veteran in Alabama, speak with an attorney who practices Alabama bankruptcy law.