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Common Concerns & Questions About Bankruptcy

Debt relief for Tyler residents who rely on disability benefits

On Behalf of | Jun 28, 2018 | Chapter 13 |

Veterans who have been injured in combat often face significant challenges as they seek to resume their lives back in Tyler and elsewhere in the United States. Physical and psychological injuries commonly require intensive, long-term treatment and can turn everyday tasks into hurdles to overcome. Recently, it was reported that thousands of veterans and their families are shocked to find that they owe thousands for survivor benefits to the government, threatening their family’s financial stability.

The Survivor Benefit Plan is like a life insurance program run by the Department of Defense. When service members with eligible beneficiaries retire, they are enrolled in the program at the maximum contribution level automatically unless they complete and submit a notarized opt-out form. Deductions typically come out of their retirement pay. However, for disabled veterans who receive the majority of their compensation through the Department of Veterans Affairs instead of the Department of Defense, the agency sends monthly bills for their Survivor Benefit Plan contributions.

Not only are the bills onerous for many retired disabled veterans and their families, but they may not even know what they are for, given the onslaught of paperwork they handle during retirement. When they call to inquire, many have been told to ignore the bills if they do not want the benefit. That has unfortunately lead to many missing the one year opt-out period and being locked into the program, some owing tens of thousands of dollars and facing garnishments from their disability pay.

Many Tyler residents rely on disability benefits to support their families, whether or not their disabilities are related to armed service. There is little or no room in their budgets to “tighten the belt” when unexpected expenses arise, or when they are notified about debts of which they were unaware. Filing for Chapter 13 or another form of bankruptcy may be an option in these situations. Chapter 13 in particular can protect many filers’ assets — including their homes — while helping them organize their debt into manageable payments and eventually discharging a portion of their unsecured debt.

When dealing with government benefits, of course, there are a number of crucial legal elements to understand before taking any action. With the right information, Tyler residents may be able to decide whether Chapter 13 bankruptcy is the right choice to obtain a fresh financial start.