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  • Bankruptcy Protection for VA Disability Compensation: The HAVEN Act

       (1 review)



    The Honoring American Veterans in Extreme Need Act of 2018 (“HAVEN Act”) provides disabled military veterans and their families with greater protections in bankruptcy proceedings by allowing the exclusion of Department of Veteran’s Affairs (VA) and Department of Defense Disability payments from the calculation when doing means testing and disposable income calculations.  The Haven Act places military disability benefits in the same protected category as Social Security Disability Benefits. 

    Note:  Benefits to current service members may still be included.  For example, monthly special compensation from the Department of Defense (DOD), and retirement pay for people on the temporary disability list.

    • Chapter 7 Applicability Veterans or their family members should exclude income covered by the Act from the calculation of CMI under Chapter 7.  
    • Chapter 13 Applicability Veterans or their family members should exclude income covered by the Act from the calculation of CMI, which may affect the determination of projected disposable income available under a Chapter 13 Plan.



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    · Edited by Tbird

       1 of 2 members found this review helpful 1 / 2 members

    I agree with the Haven Act, but there is a downside.  Remember, if the bank can't ensure they get paid, they may not want to make the loan.  That is why they keep the title to your car or home until it's paid off.  

    Veterans need to be able to "sign a Haven Act waiver" at their choice if that is required for the loan.  In other words, if you want the car/home bad enough, YOU should have control over your disability compensation, "not the creditor".  The creditor did not serve, so they should not have control.  This would apply only to future loans.  

    For example, you bought a 2021 car priced 5000 over the sticker.  Your family size changed when kids and grandkids moved in, so you now need a van and no longer need the Corvette.  

    The bank won't loan on the van because you don't have 5000 negative equity, and they can't recover if you default because you would immediately owe 5000 more than the new van could ever be sold for by rolling the negative equity on your Corvette into the van.  But, the bank won't hand you 5000 without security, so they want to be able to attach your disability payment by 600 per month if you default on the loan. 

    Now, you get a choice:  Permit this attachment by a Haven waiver or decline the loan.  It's your choice.  If you think you can afford the car no matter what, sign the haven waiver; otherwise, tell them no, and your disability is protected.  The vet deserves the choice, not the creditor.  

    The "haven waiver" would only apply to new loans made after (the date of passage of haven law) and would not apply to loans made before that time.  And, unless the creditor had a valid "haven waiver," the disability could not be attached.  

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