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P. Simmons
P. Simmons, Attorney
Category: Legal
Satisfied Customers: 34728
Experience:  16 yrs. of trial experience
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I am a disabled veteran, as defined in 38 USC 3741(1), filing

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I am a disabled veteran, as defined in 38 USC 3741(1), filing bankruptcy in North Carolina. My case was converted from chapter 7 to chapter 13 (which I didn't think was legal) and now I am being told to verify the means test my lawyer has filled out for me. Right on the means test it says not to fill it out if you are a disabled veteran as defined in 38 USC 3741(1). Also I was under the understanding that my VA disability compensation was not to be counted as income, that it was to be considered compensation like social security. No one can explain to me why I have to fill out the means test or why my compensation counts as income. Does this sound right?
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 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.

Customer: replied 4 years ago.

this is my case. I retired last April with almost 22 years of honorable service, and was rated 50 percent disabled. all of my debt was incurred during my active duty time. I brought it to my lawyers attention that my case shouldn't be converted from a chapter seven and I shouldn't have to take the means test. he sent me a formal letter asking if he should convert my case or have it dismissed. I tried to get a second opinion and no lawyer will talk to me saying it is unethical because I have an attorney. I feel like I am being wronged and I am not sure how to handle this matter. So how do I apply for an exemption?

You need to go back to the court and petition the court for the exemption.

The code is clear...if the debt was incurred while on active duty and your disability was from active duty and you are 30% or more disabled, you qualify for the exemption (so you do not have to take the means test).

11 USC 707(D) provides

(D) Subparagraphs (A) through (C) shall not apply, and the court may not dismiss or convert a case based on any form of means testing—
(i) if the debtor is a disabled veteran (as defined in section 3741 (1) of title 38), and the indebtedness occurred primarily during a period during which he or she was—
(I) on active duty (as defined in section 101 (d)(1) of title 10); or
(II) performing a homeland defense activity (as defined in section 901 (1) of title 32); or

I would make sure your lawyer understands the law...if they do not? Find one who does.

Customer: replied 4 years ago.

According to the administrator he can dismiss my case based on what he called the "catchall" statute 707(B)(2)(b). I just want to make sure that 707(D) covers 707(B)(2)(b) and he cannot in fact dismiss my case as per that statute. I think he bullied my attorney into converting my case to a chapter 13.

The law is clear

(D) Subparagraphs (A) through (C) shall not apply, and the court may not dismiss or convert a case based on any form of means testing—

A - C includes B...
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