If you are a veteran going through bankruptcy, you may be wondering whether your veteran’s benefits will be seized by creditors.  Typically, veteran’s benefits are exempt from seizure – both before and after you have received the benefits.

However, there are two exceptions.  The bankruptcy exception for veteran’s benefits does not apply when the benefits are spent on an investment that is defined as “permanent” under the bankruptcy code.  The second exception relates to child support payments.  Veteran’s benefits that have been received by the veteran can be seized if there is a court order for child support.

Let’s look at an example for the veteran’s benefit exemption as it relates to mandatory child support payments.  Let’s assume that David is a veteran who is filing for bankruptcy.  David receives $900 a month in veteran’s benefits; however there is a court order for child support payments.  Under the Texas bankruptcy code, David’s veteran’s benefits cannot be seized until they reach him.  Once David cashes the benefits check (or deposits it into a bank account), the money can be seized to satisfy child support payments.