Thanks for the chance to help. I am an attorney with over 12 years experience. Hopefully I can help you with your legal question.
The statute that applies is 38 USC § 5301.
This section exempts veterans benefits from assignment. They can not touch your VA benefits. It is not income...it is compensation. Similar to social security (in that it can not be assigned)
They can still do a means test...that is part of the Bankruptcy code.
Part of the application for Ch 7 is the means test.
And they can include income from VA compensation...but understand that that is simply to determine if you qualify for apply for the protection (under the Bankruptcy code).
That is separate and distinct from what the creditors can garnish or what the court can assign.
A totally separate analysis.
ALSO, it MAY be you are exempt from means testing:
If you are a veteran, you are exempt from the means test if:
1. you are considered “disabled,” as defined by bankruptcy law (see below), and
2. you incurred the debt while on active duty or performing a homeland defense activity.
SO if you incurred the debt while serving during the time you incurred the disability, you can, and should apply for an exemption
under Ch 7 of the Bankruptcy code.