Does VA Disability Income Count on the Chapter 7 Means Test?
For most veterans, VA disability compensation does not count as income on the Chapter 7 means test. The HAVEN Act of 2019 amended the Bankruptcy Code to leave VA disability and certain other benefits out of the current monthly income figure the means test uses. So a veteran whose disability pay would seem to put them over the Maryland median may still qualify for Chapter 7 once that income is set aside. A lot of veterans are told they earn too much and never learn this. If VA disability is part of your income, the means test math may look very different than you expect.
What the Means Test Actually Measures
The Chapter 7 means test compares your income to the Maryland median for your household size. It looks at your current monthly income, which is an average of what you received over the six months before filing. If you fall below the median, you generally pass. If you are above it, a second calculation looks at your actual expenses. The key question for a veteran is what counts as income in that first step.
How the HAVEN Act Changed the Math
Before 2019, VA disability could be swept into the income figure and push a veteran over the line. The HAVEN Act of 2019 changed the definition of current monthly income in the Bankruptcy Code so that VA disability compensation and certain other benefits are left out of that calculation. In plain terms, your disability pay does not count against you on the means test the way ordinary income does. For a disabled veteran living mostly on VA compensation, that can be the difference between being told you do not qualify and actually qualifying for Chapter 7.
What Still Counts
The exclusion is specific. Wages from a job, most other regular income, and a spouse's income are still counted in the usual way. The HAVEN Act carved out disability and service-connected benefits, not everything. We look at your full picture and tell you where each source lands, so you know before you file whether the means test works in your favor.
If You Serve in the Guard or Reserve
There is a separate rule worth knowing. Guard and Reserve members called to active duty may be able to skip the Chapter 7 means test entirely for a window of time tied to their service. That is a different provision than the HAVEN Act, and we cover it in detail on our page for active duty, Guard, and Reserve members.
If the Means Test Still Does Not Clear
If your other income puts you over the line even after VA disability is set aside, Chapter 13 is still available, and it still stops garnishment and foreclosure. And either way, your VA disability stays protected from most creditors under 38 U.S.C. 5301. Filing does not put those benefits at risk.
Not Sure How the Means Test Treats Your VA Income?
Let us run it. Book a free 15 minute consultation and we will walk through your numbers. Call 240-896-3253.
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