the7thirteen

NOTE: This post was updated on September 17, 2019 to include changes made by the HAVEN Act. Which of these statements about veterans’ benefits are true? 1. Veterans’ benefits are 100% exempt in bankruptcy. 2. Veterans’ benefits can be seized by creditors or the Trustee in bankruptcy. 3. You can lose your VA benefits if you file for bankruptcy. 4. Veterans’ benefits don’t even need to be listed in your bankruptcy case. 5. Veterans’ benefits are classified as “income” that can be used to pay creditors in a Chapter 13 case. Three of the statements (#2, #3 and #4) are totally false.   Statement #1 is true.  Statement #5 is partially true, depending on the exact nature of the benefit.   If you're confused, read on.   THE RIGHT TO RECEIVE VETERANS’ BENEFITS ARE PROTECTED.   Section 522(d) of the Bankruptcy Code lists the property that a debtor can exempt from creditors under federal law, and includes a debtor’s “right to receive . . . a veteran...

To assist you in celebrating this extremely minor (and possibly fictional) holiday: Seven Facts About Chapter 7 ONE:  Chapter 7 is the “liquidation” option under the U.S. Bankruptcy Code.   Virtually any human being can file a Chapter 7 bankruptcy petition.   You will need to have some basis for venue, of course, but there are no age or citizenship limitations.   After amendments in 2005, some individuals may have their Chapter 7 petitions challenged as abusive, if they are deemed to make too much money.   Railroads and most types of banks and insurance companies are barred from filing Chapter 7 TWO:  When a Chapter 7 case is filed, a Trustee is appointed.   The Chapter 7 Trustee receives a commission on any funds paid to creditors.   What if, as in the vast majority of cases, there are no funds to distribute?   The Trustee receives $60 from the bankruptcy filing fee (unless the filing fee is waived by the Court).   When th...

“I Didn’t File Bankruptcy On That!” Nonlawyers sometimes use bankruptcy phrases that don’t have parallels in the Bankruptcy Code or in actual practice.  Here are some examples: “Thrown into bankruptcy.”   This phrase is probably a leftover from the distant memory of English debtors’ prisons.   It is possible to be figuratively “thrown into” a Chapter 7 or Chapter 11 bankruptcy using a complicated and arcane tactic known as an “involuntary” petition.   It usually requires three or more creditors to join together and file a petition against someone else.   It is not to be embarked upon lightly and involves no actual throwing, tossing or defenestration.   The vast majority of bankruptcy cases – and all Chapter 13 cases – are filed voluntarily.   Can you throw yourself into bankruptcy?   It sounds physically impossible.  One bad cliché deserves another, so remember that it’s always best to look before you leap.   If you are ...