Q: After chapter 13 bankruptcy payments begin, can trustee take VA disability income away?
I'm 74 years old. Chapter 13 payments began in July of last year, to save house and repay a certain percentage of unsecured debt, on 5-year plan. They take over half of fixed income from military retirement, SS, and pension plans. At the time I was only on 40% of VA disability, so no direct disability pay was ever received, just used to reduce tax burden on retirement pay. In March of this year, after further evaluation by VA doctors, I was granted 80% disability, which resulted in direct disability monthly payments of $1,767, which reduced military retirement by $68 a month, so a net gain of about $1,700 a month. Also expecting a lump sum payment for retroactive disability pay to go back to February of last year, which could be well over $20,000. Must I report this change in income to the bankruptcy trustee? How much of this disability pay could conceivably go to creditors? I'm in Florida, which has statutes that override most federal exemptions. Thank you for any advice.
A: You must report it to the Trustee, but the Trustee cannot seize your disability income.
Bruce Alexander Minnick agrees with this answer
A: A drastic change in circumstances warrant advising the trustee. It would not be part of your Current Monthly Income Test as it would be exempt. Trustee should not be able to seize or demand those funds.
Bruce Alexander Minnick agrees with this answer
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