Will I lose my Veterans benefits if I file for bankruptcy?

Will I lose my Veterans benefits if I file for bankruptcy?–NO! 

In 2019 the president signed the Honoring American Veterans in Extreme Need Act of 2019 (HAVEN Act) into law. The HAVEN act protects certain veterans’ benefits from being used to pay creditors and may influence whether veterans can file for bankruptcy under Chapter 13 or Chapter 7. To file under Chapter 7, a person must qualify and “pass” the “means test”  

The “means test” takes into account your current monthly income, expenses, and family size to determine if you can file a Chapter 7 bankruptcy. If you make less than the median income for your state, you “pass” the test and can file a Chapter 7. If you make over the median income for your state, you can still file bankruptcy, but it will likely be under Chapter 13 and the veteran will be required to make payments to their creditors over 5 years. For reference the median income limits in Kansas are: 

Family Size 1 Person 2 People 3 People 4 People* 
Median Income  
*Add 9,000 for 
each individual 
over 4 people. 
$51,957  $71,559 $83,375 $92,890 

The HAVEN Act amended the definition of current monthly income to exclude veterans benefits from the calculation. Before the HAVEN Act, the bankruptcy Code defined current monthly income as the average monthly income “from all sources that the debtor receives” and only excluded Social Security payments. 

Now, veteran’s benefits are also excluded from the current monthly income calculation, which may allow more veterans to file Chapter 7 bankruptcy. This exclusion also benefits Chapter 13 filers. Before, veterans would be required to turnover part of their disability benefits each month to their creditors before they could obtain a discharge under Chapter 13.  


The passing of the HAVEN Act rectifies unequal treatment of disability benefits under bankruptcy law. Veterans benefits will be treated the same as Social Security benefits and more veterans may be able to file under Chapter 7 or exclude their benefits from payment plans under Chapter 13.

If you have questions about bankruptcy please feel free to contact our office.  At Coons and Crump we have handled thousands of bankruptcy cases and we are happy to give you a free consultation.  Our bankruptcy lawyers have offices in Wichita, Topeka, Lawrence and Overland Park.

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