By Katy Stech Ferek: For More Info, Go Here…
Congress passed a bill that would extend a lifeline to financially struggling injured veterans, enabling them to spend disability payments instead of using them to pay down debt in bankruptcy protection.
The Senate on Thursday passed a bill sponsored by Sen. Tammy Baldwin (D., Wis.) that consumer advocates say fixes a mistake written into a 2005 overhaul of the country’s bankruptcy rules. The House passed the bill last week. It now goes to the White House for President Trump’s signature.
The president is expected to sign the bill.
“Our current and retired military heroes sacrifice so much to defend our freedom, but they may face disproportionate challenges when they fall on hard times,” said Sen. Chuck Grassley (R., Iowa), who supported the measure. “This bill updates the bankruptcy law to ensure that veterans are not penalized for receiving military or veterans’ disability benefits when filing for bankruptcy.”
Under the 2005 law, debtors who receive disability payments from the Social Security Administration are allowed to keep that money during bankruptcy. But disabled veterans who receive checks from the Department of Veterans Affairs and Department of Defense have had to classify those payments as disposable income, which requires that that income be used to pay off credit-card bills, auto loans and other consumer debt.
The law’s classification of veterans’ disability payments as disposable income has also made them less likely to qualify for chapter 7 protection, the more popular type of bankruptcy that is quicker and cheaper than other forms, under federal bankruptcy law.