VA Disability and Social security

[DYLAN150]

USC Title 38, Section 53, paragraph 5301(a)1: "Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary" (VA Disability)

OK, so I am trying to figure why they count VA Disability on the means test as income and not Social Security, any help here?

[JEM]

I would love to know this too, as dh gets VA disability. But every lawyer I've interviewed so far confirms that yes, it gets counted. However, they said it cannot be garnished.

BUT, if it's used on the means test and pushes us into a 13, isn't that "garnishing" it in a sense?

I know, I'm totally not making sense, but the discrepancies with filing drive me nuts. LOL

[flyinbroke]

Another reason I have not filed....my military retirement and disability are not garnishable, yet they count against me in a BK case, and they CAN be taken as "disposable income" which means they are garnished.

[HHM]

It has to do with the definition of "Current Monthly Income" in BK Code Section 101(10A). The ONLY exception is income received as benefits under the Social Security Act, payments to victims of war crimes and victims of terrorism.

So, what does that mean, ONLY Social Security Income and Social Security Disability are excluded from the means test, EVERYTHING else counts.

[JEM]

Another reason I have not filed....my military retirement and disability are not garnishable, yet they count against me in a BK case, and they CAN be taken as "disposable income" which means they are garnished.

Is that your only income? I'm wondering because our VA disability gets DD into our bank with dh's regular paycheck, and I'm wondering if we should move that to a separate account number (even if it is at the same CU), just so it's separate from our other money.

TX is a no garnish state, BUT, I know they can swipe a bank account.

Eh, this whole thing is so stressful.

[HHM]

Is that your only income? I'm wondering because our VA disability gets DD into our bank with dh's regular paycheck, and I'm wondering if we should move that to a separate account number (even if it is at the same CU), just so it's separate from our other money.

TX is a no garnish state, BUT, I know they can swipe a bank account.

Eh, this whole thing is so stressful.

That would be a good idea. Many banks will allow you to set up "specially designated" accounts. So long as you do not comingle other funds in that account, the bank will recognize the funds as exempt, so in the event the bank receives a garnishment, the bank will not freeze those funds.

[JEM]

That would be a good idea. Many banks will allow you to set up "specially designated" accounts. So long as you do not comingle other funds in that account, the bank will recognize the funds as exempt, so in the event the bank receives a garnishment, the bank will not freeze those funds.

Ok...I think I may have dh look into changing his VA direct deposit then. Better safe than sorry.

Anyone ever had to do this.....how "smoothly" did the transition go with changing bank accounts? We've had the same account # since he's started getting the VA disability, so we've never had to change it.

I don't want to deal with any accounting snafu's on top of everything else right now.

[LadyInTheRed]

BUT, if it's used on the means test and pushes us into a 13, isn't that "garnishing" it in a sense?

My first thought was, "Yeah! Maybe somebody should take that issue through the courts." But, then I realized, you are filing bankruptcy voluntarily. In a 13, you agree to pay all of your DMI to the trustee in exchange for a discharge at the end of the plan. If you don't qualify for a 7 and don't want to file a 13, you have the choice of not filing BK in which case your VA disability remains exempt from garnishment by your creditors. Including the benefits in the defenition of income is not "attachment, levy, or seizure" referred to in USC Title 38, Section 53, paragraph 5301(a)1. You are basically entering into a contract to commit all of your disposible income (as defined in the BK code) to the plan.

This doesn't explain why Social Security benefits should be treated differently. It is just how the BK Code was written. It could have been an oversight or could have been a result of wheeling and dealing in the legislature.

[flyinbroke]

No, it is not my only pay; I do have a job as well as pension and disability and 100 percent of wages are exempt from garnishment in TX.

I have not changed banks, but am seriously thinking of rerouting my paycheck as it is fair game once deposited and my old bank is in another state where it is not safe to keep it. However, I don't know a state that does not allow access to bank accounts.

We have the option of the pay card but writing checks off those is a major PITA.

[JEM]

No, it is not my only pay; I do have a job as well as pension and disability and 100 percent of wages are exempt from garnishment in TX.

I have not changed banks, but am seriously thinking of rerouting my paycheck as it is fair game once deposited and my old bank is in another state where it is not safe to keep it. However, I don't know a state that does not allow access to bank accounts.

We have the option of the pay card but writing checks off those is a major PITA.

Ya, see with dh's job they'd have to wait for a paycheck to be mailed out. I don't want that hassle, and the company really discourages getting checks mailed vs. direct deposit.

I'm thinking at the very least we'll separate our VA $$ from the paycheck account. And here soon, I think I will start taking money out of the bank on payday and just paying things with cash vs. debit card, or check (when possible).

If you don't mind me asking , are you waiting to file to get into a 7, or just waiting until you are forced into filing?

We're in somewhat of a limbo right now (in TX) and I'm wondering since we are a no garnish state and don't really have any assets they can take, if we should just wait until we are forced to file.

[WhatMoney]

However, I don't know a state that does not allow access to bank accounts.

Have you tried a Delaware bank, located only in Delaware? (Mentioned before on the forum - no one followed up.)

[flyinbroke]

Delaware has no usury laws, which is why it is one of the states that CC companies love to base ops in. I don't know much else about the banks there. Not sure if I have ever read into them; not sure how I would get a DE bank that is not located anywhere else.

EDITED: ING Direct is in Delaware. I applied for their Electric Orange checking account and was denied. They pull credit because a line of credit is mandatory for Electric Orange. SO now I have yet another hard pull on top of crap credit.

JEM, I will likely never qualify for a 7 unless I lose my job, then I am completely screwed anyways. I suppose the 13 would be absolute last resort as long as I am working and can pay off 75 percent of my bills. If my hand is forced, then I will. However I don't want to have to have a money daddy for five years and lose every dime I have, especially with a few senior pets. I am in TX, have no assets. Of 18 bills I have, only 5 are delinquent (across 3 banks). I have 40K in student loans that cannot be dismissed, but will be back burnered during a 5 year span (they are considered unsecured and only get a portion of payments)...meaning I will owe 50K+ after the interest is tacked on. After meeting with a lawyer who said he would never recommend a 13 for someone like me, I outlined my tactics and he said it was sound. I could get sued, though it doesn't seem likely. I checked the court docket history. THe three banks like small claims a lot, but do not file much in civil court for larger amounts.

[HHM]

The effect HARD PULLS on your credit is so over rated. FICO 2010 has practically eliminated any negative impact of hard pulls on your credit.

[WhatMoney]

Delaware has no usury laws, which is why it is one of the states that CC companies love to base ops in. I don't know much else about the banks there. Not sure if I have ever read into them; not sure how I would get a DE bank that is not located anywhere else.

I was referring to this Topic (Are All Delaware Bank Accounts Exempt From Garnishment?)

http://www.bkforum.com/showthread.php?t=51308

Applied Bank of Wilmington and at least one other accept out-of-state accounts. I have not heard if this worked out for anyone, although Ryan said he was interested.

Many online banks do not check credit, only chexsystems, when applying for a basic checking account.