Disabled Veteran Exemption from the Presumption of Abuse in Bankruptcy
- Sheereen E. Middleton, Esq.
- Feb 3
- 2 min read
Introduction
Bankruptcy law has special protections for veterans, especially those who are disabled. Normally, people filing for Chapter 7 bankruptcy must pass a means test to prove they qualify. But if you’re a disabled veteran, you may be exempt from the means test entirely.
This can make filing for bankruptcy faster, simpler, and more accessible for those who served.
What Is the Means Test?
The means test compares your household income to the state median and calculates your disposable income after expenses.
If your income is too high, you may be presumed to be abusing the bankruptcy system.
That presumption of abuse may force you into Chapter 13 repayment instead of Chapter 7 discharge.
But disabled veterans have a statutory exemption that overrides this.
The Disabled Veteran Exemption
Under 11 U.S.C. § 707(b)(2)(D), you are exempt from the means test if:
You are a disabled veteran (with at least a 30% VA disability rating, or discharged due to disability), and
Your debts were primarily incurred during active duty or homeland defense activities.
This means you can file Chapter 7 bankruptcy without passing the means test.
Why This Matters
Without this exemption, some veterans with steady retirement or disability pay could be pushed into Chapter 13 even when they need immediate relief. With the exemption, you can:
Discharge unsecured debts like credit cards and medical bills faster.
Avoid the burden of a 3–5 year repayment plan.
Preserve disability income for living expenses.
Other Veteran Protections
VA disability benefits are exempt from creditors and generally excluded from the means test.
Active duty service members may qualify for additional protections under the Servicemembers Civil Relief Act (SCRA).
Veterans may also qualify for special state-level bankruptcy exemptions depending on where you live.
Conclusion
If you are a disabled veteran, you may not need to go through the complicated means test process when filing for bankruptcy. This exemption recognizes your service and ensures you can access the debt relief you deserve without unnecessary obstacles.
💡 Next Step: Contact Middleton Bankruptcy to confirm whether you qualify for this exemption and how it could streamline your case.
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