Helping Those Who Have Borne the Battle: Working with Veterans, Servicemembers, and Their Families on Financial Issues

4 Min Read By: Megan Adeyemo, Nicole McLemore

Last fall, the Pro Bono Services Subcommittee of the ABA’s Business Law Section’s Business Bankruptcy Committee presented a program entitled “Helping Those Who Have Borne the Battle: Working with Veterans, Servicemembers, and Their Families on Financial Issues” at the virtual Insolvency 2020 Conference. The program panelists[1] identified tips and several key issues arising in the representation of veterans, servicemembers, and their families, and explained significant changes made to the Bankruptcy Code in 2019.

The Importance of Identifying Clients Who Have a History of Military Service

It is critical for attorneys undertaking pro bono representation to identify clients who have served in the military or who may have family members who have served, because military service could qualify the client for special financial resources and increased legal protections. For example, servicemembers may be eligible for VA disability compensation or VA veterans’ pension, which may be protected income in bankruptcy. In addition, clients with military service could also require special considerations before filing for bankruptcy.

Identifying those who have a history of military service can be difficult, however, because the term “veteran” has different meanings across various state and federal programs and laws, as well as among individuals, and could lead some who have served not to identify themselves as a “veteran”. Instead, the experts recommend that attorneys ask prospective clients, “Have you ever served in the military?” Framing the question in this way can help the attorney identify whether the client might be eligible for service-related benefits and protections, even though the client might not satisfy a particular definition of the term “veteran.” Because service-related benefits and protections might also be available to, for example, certain family members, loved ones, and household members, it can also be helpful to frame the question even more broadly.

Specific Legal Protections and Benefits

Attorneys should generally be aware of the specific military service-related legal protections and benefits available in their jurisdiction. Some common protections and benefits are:

  • Servicemembers Civil Relief Act (SCRA)
  • Chapter 53, Title 38: Special Provisions Relating to [Veterans’] Benefits
  • VA Health Care
  • VA Disability Compensation
  • VA Veterans Pension
  • Soldiers’ Homes
  • Forever GI Bill
  • Vocational Rehabilitation

Pre-Bankruptcy Considerations

Attorneys should also keep pre-bankruptcy considerations in mind prior to and throughout representation, including:

  • “Collection proof” debtors
  • Disability-based student loan forgiveness[2]
  • Benefit overpayment disputes, waivers, and payment plans
  • Currently not collectible (hardship) status with taxing authorities
  • Military discharge status (and whether it can be upgraded or corrected)
  • Unusual issues:
    • Impact of debts and bankruptcy on a servicemember’s Security Clearance
    • Impact of bankruptcy upon future use of VA Home Loan Guaranty benefits
    • Possible nondischargeability in bankruptcy of fraud-related VA benefits overpayment

Recent Legislation: HAVEN Act

Attorneys should keep apprised of new developments in the Bankruptcy Code, such as the Honoring American Veterans in Extreme Need Act (the “HAVEN Act”),[3] that can help current and former servicemembers, among others, filing for bankruptcy.

In 2018, the American Bankruptcy Institute (“ABI”) created the Task Force on Veterans and Service Members Affairs. The Task Force sought to eliminate some of the underlying financial factors that contribute to suicide rates among those who have served. The Task Force targeted specific portions of the Bankruptcy Code that put servicemember and veteran disability benefits at risk.

The Task Force’s efforts culminated the HAVEN Act, a piece of bankruptcy reform legislation that amended 11 U.S.C. § 101(10A)—the definition for “current monthly income”—to exclude disability payments received from the U.S. Department of Defense and the U.S. Department of Veterans Affairs from the current monthly income calculation.[4] As a result, it is substantially easier for current and former servicemembers (among others, including family members who receive qualifying benefits) to keep those benefits while retaining eligibility for relief under the Bankruptcy Code.

Serving Those Who Have Served

More work to support servicemembers and their families is needed. You can find volunteer opportunities and more information at these sites:


[1] Judge Elizabeth S. Stong, U.S. Bankruptcy Court for the Eastern District of New York, Co-Chair of the Pro Bono Subcommittee of the ABA Business Law Section’s Business Bankruptcy Committee; Judge Mary Grace Diehl U.S. Bankruptcy Court for the Northern District of Georgia; (Army Lieutenant Colonel) Kristina M. Stanger, partner at Nyemaster Goode, P.C. law firm (Des Moines, Iowa); and Jessica H. Youngberg, Law Clerk, U.S. Bankruptcy Court for the District of Massachusetts.

[2] See https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge.

[3] Pub. L. No. 116-52 (codified at 11 U.S.C. § 101(10A)(B)(ii)(IV)).

[4] The statute reads in relevant part, “…any monthly compensation, pension, pay annuity, or allowance paid under title 10, 37, or 38 in connection with a disability, combat-related injury or disability, or death of a member of the uniformed services…” The payment source and basis are key (Title 10 – Armed Forces; Title 37 – Pay and Allowances of the Uniformed Services; Title 38 – Veterans’ Benefits).

By: Megan Adeyemo, Nicole McLemore

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