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The Honoring American Veterans in Extreme Need Act of 2019 (the “HAVEN Act”) was signed into law by the President on Aug 23, 2019. The legislation is intended to remedy disparate treatment of current servicemembers and disabled veterans in bankruptcy proceedings. Since BAPCPA was enacted in 2005, service-related disability payments from the Department of Veterans Affairs (the “VA”) and Department of Defense (“DOD”) had been included in a debtor’s income for purposes of the means test. By contrast, Social Security disability benefits were expressly excluded.

The HAVEN Act creates parity among disability benefits, regardless of source, by modifying the definition of “Current Monthly Income” set forth in 11 U.S.C. § 101(10A)(B). As revised, the definition now expressly excludes monthly compensation paid under “title 10, 37, or 38 in connection with a disability, combat related injury, or death of a member of the uniformed services.” Practitioners should carefully review the new definition before calculating the means test or completing Schedule I for any new debtor-clients, and consider whether changes to DOD or VA disability benefits may trigger a duty of disclosure for existing chapter 13 debtor-clients. For more information about servicemember compensation, see 37 U.S.C. § 101 et seq. “Pay and Allowances of the Uniformed Service” and 38 U.S.C. § 101 et seq. “Veteran’s Benefits.” 

The HAVEN Act is worthy of attention because veterans are disproportionately likely to file for bankruptcy in the U.S. Additionally, in 2018, over 99,000 individuals in Minnesota received DOD or VA benefits that will now be excluded from current monthly income.