Question:
I have to file bankruptcy and the lawyer said that my disability dollars can be attached. Everything I have read says they are not. Who is correct? Do I have to add it so the bankruptcy can attach it ? Help.
Jim's Reply:
n broad terms, VA disability benefits can't be attached or otherwise garnished for any debt other than to the federal government. If you owe the IRS, your disability benefits can be used to pay that debt. if you default on a car loan, those benefits can't be attached. For example, read here.
Having said that, courts may order litigants to complete financial statements listing all income. "All" income includes VA disability benefits along with everything else. Then that total income figure may be used to determine a payment schedule based on all income. Thus, VA disability benefits aren't garnished per 5301 but they are used in settlements...most often divorce/child support/alimony cases. You need to review this with your attorney so that you understand just how your benefits will be accounted for.