Filing For Bankruptcy Won't Necessarily Jeopardize Your Veteran Benefits
Posted on: 20 December 2021
You might be struggling to pay for medical debts and you might believe that filing for bankruptcy is the best option. However, if you are a veteran, you might believe that the act of filing for bankruptcy will cause you to lose your benefits. However, this is simply not true.
Bankruptcy Means Tests
When you are filing for bankruptcy, you will be subjected to a means test. This determines whether you should file for Chapter 7 or Chapter 13 bankruptcy. With Chapter 7 bankruptcy, your debts are discharged after all of your assets have been liquidated. However, with Chapter 13 bankruptcy, you will use your existing income to make payments to creditors to gradually pay down your debts.
By receiving benefits as a veteran, you may be forced to file for Chapter 13. However, your benefits will not be seized and you will be able to keep any income, minus payments made to creditors under the Chapter 13 agreement.
If your income is still low enough that you will qualify for Chapter 7 bankruptcy, you will be able to keep all of your benefits and will continue to receive them after your debts have been discharged.
How to Make Sure Your Benefits are Safe
If you believe that you might face certain consequences for filing for bankruptcy, it is important to speak to a bankruptcy lawyer to make sure that this is the case. There are often misconceptions about bankruptcy law that a law service can clear up with a free consultation. This area of law is very technical and many veterans don't know how they can benefit from bankruptcy.
How to Take the Means Test
A means test exists so that the courts can have an objective way to determine if you should be qualified for Chapter 7 bankruptcy. This is only relevant to individuals who file for bankruptcy and not businesses. It is also only relevant to those who primarily have consumer debt. It is based on your monthly income and the median household income for your state.
If your income is too high, the courts will then determine how much you should be able to pay over the course of five years when subtracting expenses. If the amount you are able to pay is above a specific amount, you may be forced to have your bankruptcy converted to Chapter 13. Fortunately, a professional bankruptcy law service can help you take the steps necessary to have the best possible outcome with your bankruptcy.Share