Legal Question in Bankruptcy in Minnesota

Lump sum VA benefit check and exemptions

The VA recently determined I am unemployable and rated me 100% permanently disabled, an increase from my previous rating of 60%. I had been struggling at a job to make ends meet for my family and me. Now I don't work. The stipend I receive is enough for us to live modestly. Now, however, I can't afford to pay on a truck lease or credit card debt so, after much angst, we're filing for relief under chapter 7.

The VA began my new monthly disability payment March 1st. They also sent a lump-sum payment to cover the six months it took to determine my case.

My question:

Will a trustee require that I apply this lump-sum payment from the VA to my credit card debt? We are hoping to purchase a used auto and some needed clothing with this money. I can't find any information on this other than understanding that "monthly" disability payments from the VA are exempt in a chapter 7 filing.

Can someone help please?

Kindest regards


Asked on 3/07/99, 12:08 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: Lump sum VA benefit check and exemptions

The VA lump sum benefit payment is exempt provided it is kept in a manner in which it can be distinguished from other funds. Best to put it in a separate account. The interpretation of the exemption for disability benefits varies from court to court, so be sure to consult with a competent bankruptcy lawyer in your community.

Daniel Press

Chung & Press, P.C.

6723 Whittier Ave., Suite 302


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Answered on 3/09/99, 11:05 am


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