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1 1 (January 25, 2019)

handle is hein.crs/govyjy0001 and id is 1 raw text is: Congressional ______ *Research Service Veterans' Benefits and Bankruptcy January 25, 2019 Although federal law entitles veterans to certain types of monetary benefits-such as compensation for disabled veterans injured in the line of duty-these benefits are not always enough to satisfy veterans' financial needs and obligations. Statistics from the U.S. Census Bureau indicate that the veteran poverty rate has increased 8.7% in recent years, and that close to half of disabled veterans between the ages of 55 and 64 are below the poverty line. One way that a veteran facing particularly difficult financial circumstances may potentially obtain relief from certain debts is by filing for bankruptcy. However, bankruptcy relief comes at a cost: a debtor must ordinarily sacrifice some of his income or his assets to satisfy the claims of his creditors in whole or in part. As relevant here, depending on the circumstances, a veteran may need to relinquish some of his veterans' benefits to his creditors. Existing bankruptcy law thus treats veterans' benefits less favorably than social security benefits, the latter of which the Bankruptcy Code insulates from the claims of creditors under specified circumstances. Several commentators-as well as some Members of Congress-have advocated amending the Bankruptcy Code to make it easier for debtors to shield veterans' benefits from creditors. Proponents of such an amendment argue that benefits paid to veterans through the Department of Veterans Affairs should be treated no differently in bankruptcy than benefits received by individuals from the Social Security Administration. As discussed below, these proposals raise complex legal questions. This Sidebar surveys the legal issues surrounding the treatment of veterans' benefits in bankruptcy. After providing an overview of the U.S. bankruptcy system, the Sidebar analyzes how veterans' benefits are treated in the two most common types of bankruptcy proceedings for individual debtors. The Sidebar concludes by discussing proposals to modify the treatment of veterans' benefits in bankruptcy and identifies pertinent considerations for Congress when developing and debating such proposals. Background on Bankruptcy Law One way that an individual may potentially obtain relief from debts he cannot repay is by filing for personal bankruptcy. A central purpose of' bankruptcy law is to provide a procedure by which insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy 'a new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.' To fulfill that purpose, the federal Bankruptcy Code allows certain debtors to discharge-that is, eliminate his obligation to repay-some or all of his debts if he satisfies certain statutory prerequisites. In Congressional Research Service https://crsreports.congress.gov LSB10246 CRS Legal Sidebar Prepared for Members and Committees of Congress

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