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Veterans seeking debt relief often give up their benefits

The decision to file for bankruptcy is not always easy and typically involves consideration of a number of financial issues. People in Florida have to consider many different factors before filing, such as their current level of debt, income and much more. However, for veterans, the decision to seek debt relief could be much more difficult.

In general, disability benefits are not taxable, and as such are not included under the umbrella of disposable income in bankruptcy filings. A glaring exception -- veteran disability benefits. Under current law, when a disabled veteran files for bankruptcy, his or her veteran's disability benefits are counted as disposable income. This means that these benefits can be seized by debt collectors for repayment.

Two senators are trying to change this. Sens. Tammy Baldwin and John Cornyn recently introduced the Honoring American Veterans in Extreme Need Act, which could give veterans benefits the same type of immunity during bankruptcy that other forms of benefits already enjoy. Supporters of this bill point out that it is unfair to require veterans to forgo their disability benefits when those in the general population are not required to do the same.

While this legislation has not yet been made into law, it has received support from dozens of senators on both sides of the political spectrum. If passed, Florida veterans might feel more assured about taking concrete steps toward filing for bankruptcy. For those who are unsure about their best options for debt relief, speaking with an experienced attorney could provide some clarity on the matter.

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