Summary: Bankruptcy gives veterans special treatment, including no means test. Legal protections are also in place for veterans in other areas regarding wage garnishments and property taxes.
If you are a veteran with overwhelming debt, get help. If bankruptcy is the right choice for you, being a veteran will give you many advantages. With the CARES Act passage, veterans have an easier time qualifying for a “straight bankruptcy” and lower plan payments in “a Chapter 13 debt reorganization”.
As a former vet, Carol Cross Stone, our attorney, would be honored to help you resolve your financial issues. The world is stressful enough. Don’t struggle alone with your debt. Get help if you are a veteran or active-duty military and know all your rights.
Special Treatment in Bankruptcy
If you are a veteran, bankruptcy gives you special treatment (as it should be):
- No means test for certain veterans (depending on how long since discharge)
- No means test for disabled veterans
- Most veterans benefits based on a disability do not have to count this income for bankruptcy purposes if there is a medical component or combat pay.
- Property taxes at a lower rate, or if a disabled veteran, you may not have to pay property taxes at all.
Legal Protections Even Outside of Bankruptcy
Even outside of bankruptcy, vets have favor:
- Protection from garnishment of veteran’s benefits except for child support or federal debt
- Protection from lawsuits going forward while on active duty without actual service. You can be served by mail and posting if you can’t be found. But the creditor has a duty to determine whether or not you are on active duty. If on active duty, the Servicemembers Civil Relief Act prevents a lawsuit from going forward without you. This includes your dependents who may have co-signed a debt.
- Court order required to foreclose on property while on active duty military and for an additional 12 months after this.
Disabled Vets Pay Lower Property Taxes in Texas
Disable veterans may get lower property taxes or may not have to pay property taxes at all.
100% disabled veterans – qualify for exemption of the total appraised value of the home. No property taxes have to be paid.
Sliding scale for other disabled veterans
- 10-29% – $5,000 exemption
- 30-49% – $7,500 exemption
- 50-69% – $10,000 exemption
- 70-99% – $12,000 exemption
Widows of Disabled Veterans Also Eligible for Lower Property Taxes in Texas
Special tax treatment is also permitted for a disabled veteran’s surviving spouse. The Texas Comptroller publishes an FAQ on this. Contact your property tax office for more information.
Veteran’s Wage Garnishment Protections
Veteran’s benefits may have some protection. The key to protecting this income source is to keep the account segregated. That means never put any funds into the account other than the veteran’s funds. You may take them out for any purpose, but do not place funds into the account that you cannot directly prove are veteran’s benefits.
Resources for Veterans
Ready to find out whether bankruptcy can help you?
Complete our free, online debt evaluation form or call/text our office at (903) 759-5922. You can also email Carol@CrossStone.com. Find out if bankruptcy is your best option and whether it will help you.