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Simon, Fitzgerald, Cooke, Reed and Welch
Simon Fitzgerald, LLC
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Are disabled veterans being forced into Chapter 13 bankruptcy?

Louisiana is home to many disabled U.S. military veterans whose sacrifices and courageous service has helped protect and preserve the United States as a free nation. Many people in this state and others are upset about federal bankruptcy laws, saying the current regulations are biased against disabled military veterans facing serious financial distress. It seems that existing laws often force disabled veterans to choose Chapter 13 bankruptcy because their disability benefits disqualify them for liquidation debt relief.

Chapter 13 bankruptcy is a valuable tool for many people who have means to pay back debt. The program allows them to create reorganized payment plans to retain ownership of their assets while continuing to make payments that are feasible to their current financial statuses. There are reportedly many disabled veterans, however, who would benefit from Chapter 7 bankruptcy, a more immediate form of debt relief, as Chapter 13 often takes three to five years to process.

The problem is that existing bankruptcy codes force disabled veterans to include their disability benefits as income, which often causes them to fail the means test. The means test compares an applicant's income with the average income in the state and if a person earns the same or more than the median income, he or she is ineligible for Chapter 7 bankruptcy. Disabled veteran advocates say that nonmilitary applicants are not subjected to this same bias, which, they say, is not only unjust but an affront to those who have served their country with valor.

Chapter 13 is often the best option for those who have reliable income who need debt relief that does not involve complete liquidation of assets. Any U.S. military veteran or nonmilitary citizen in Louisiana who has questions about the differences between types of bankruptcy, and wishes to obtain guidance as to which option best fits a particular set of circumstances, may request a meeting with an experienced bankruptcy law attorney. The laws governing such matters are complex and it makes good sense to speak with someone well-versed on the topic when trying to determine what options are available to overcome serious debt problems.

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