Please clarify

[Morgon64]

Our expenses vs income from WAGES are enough to justify a Ch 7 with very little DMI.

However, my husband's VA disability ($600/month) will definitely put us over and get us converted to Ch 13, I think. Or will it? It seems to me that any Ch 13 payments would be essentially coming out of the VA disability since everything else goes towards expenses.

Or is that not the way the court will see it?

I'm trying to wrap my head around how VA benefits are declared exempt in my state (FL) - I read the statute - but seem to be in name only. What good is an exemption if it gets counted for everything?

Am I missing something here?

(I apologize for being a bug in advance.)

[HHM]

You are making the common, mistaken, assumption that everyone makes when they begin approaching BK issues.

There is a difference between "exemptions" and "income"

Exemptions protect your right to "receive" the VA disability (and SSI, etc). Creditors cannot go after it directly.

HOWEVER, since chapter 13 is about your expenses and your "real" ability to pay something back to your creditors, the court still can pass judgment on how you "spend" the VA disability.

In short, your right to receive your VA disability is protected, but in chapter 13, you don't have the right to spend it however you please. VA benefits are a regular source of income and count toward determining eligibility toward chapter 7 vs 13. Unless you fit into one of the exceptions to doing the means test, or have special expenses to put on the means test to demonstrate you will have no disposable income, then yes, the VA income may be used in a chapter 13.

[Morgon64]

Thank you so much.

I think this is where I'm getting confused: we DO have an exemption to the means test. Husband is less than 540 days post redeployment from overseas.

Don't we still have to justify income/expense for schedules i and j, however, and won't that just put us back in the same boat anyway - headed back to 13?

[HHM]

Not really, but this is still a district specific issue. However, if you are "excepted" from having to do the means test, that means, none of those rules in section 707 apply.

Keep in mind, there are 2 criteria that all must be satisfied for that veteran exception, (1) disabled veteran, AND (2) the debt was mostly accumulated during the period of active duty or performing a homeland defense activity.

If you are excepted from means testing, that means section 707 does not apply, thus, the UST has no basis to push you into a chapter 13 even if you show DMI on schedules I & J. This is why, for example, business chapter 7 debtors can have thousands of dollars in DMI on schedules I & J and yet still get chapter 7, because 707 simply does not apply.

[Morgon64]

I don't think (2) applies here...

Based upon 1C from below:

http://www.filing-bankruptcy-form.com/newforms/B22_A.pdf

Husband is National Guard and has been back less than 540 days. Doesn't say anything there about the debt having to have been accumulated during active duty, etc.

Right?