Under current bankruptcy law, disability benefits paid by the Department of Veterans Affairs and the Department of Defense are included in the calculation of a debtor’s disposable income, which increases the portion of the debtor’s income that is subject to the reach of creditors. By contrast, current bankruptcy law explicitly exempts Social Security disability benefits from this disposable income calculation.

 

To eliminate this unequal treatment of disability benefits, the HAVEN Act would exclude VA and DoD disability payments made to veterans or their dependent survivors from the monthly income calculation used for bankruptcy means testing.