Divorce and Creditors
Well you gave it your best shot, but that stripper you married right out of boot camp was strangely just not a relationship built on a solid foundation.
And now they are coming after your money...
OR
You owe money to someone, and they are after your money...
IMPORTANT NOTE:
It is STRONGLY recommended that you obtain a lawyer if you are going through a divorce!
VA Disability
VA disability is NOT considered an asset.
The Supreme Court in Mansell v. Mansell found that VA disability is NOT an asset that can be divided.
The Supreme Court in Rose v. Rose found that VA disability may be counted as income. However, stating that courts cannot directly force the VA to pay parties. See Apportionment.
Alimony
VA disability IS counted as income.
Child Support
VA disability IS counted as income.
Garnishment
VA disability CANNOT be garnished, UNLESS the Veteran elects to receive VA disability instead of their military retirement. And even then, only in cases of:
Alimony;
Child support; or
Retirement asset itself was divided.
Apportionment
Functionally, the same outcome as a garnishment.
The VA CAN apportion VA disability to a former spouse who applies for apportionment to satisfy alimony and/or child support. The Veteran can appeal the VA's decision to apportion their disability benefits - particularly if the apportionment will cause undue hardship to the Veteran.
Military Retirement
IS considered an asset and CAN be divided!
Alimony
Military retirement IS be counted as income.
IMPORTANT NOTES:
If you were married for less than 10 years over the course of your military service, some other arrangement MUST be made to pay the former spouse.
No more than 50% of disposable retired pay can be made payable by all court orders to former spouse(s).
10/10 Rule
If you were married to your spouse for at least 10 years over the course of your military service, DFAS can pay the former spouse directly.
If you were married for less than 10 years over the course of your military service, some other arrangement MUST be made to pay the former spouse.
IMPORTANT NOTE:
Even if you were married under 10 years, a court may still deem your retirement income and it CAN be targeted!
Child Support
Military retirement IS counted as income.
Garnishment
Military retirement CAN be garnished ONLY in cases of:
Alimony
Child support
Retirement asset itself is divided
IMPORTANT NOTE:
No more than 65% of disposable retired pay may be garnished.
Miscellaneous Situations.
For the bits and bobs of separation.
Thrift Savings Plan (TSP)
Is an asset that CAN be divided.
Health Care
Upon the completion of a divorce/annulment the former spouse loses their eligibility for CHAMPVA, if applicable.
Your former spouse may still be eligible for TRICARE.
VA Disability
Ensure you remove your former spouse as a dependent from your VA disability. Failure to do so will result in an over-payment which you will be required to return to the VA!
Life Insurance
Update your life insurance beneficiary, unless you want it to continue to pay out to your former spouse. Remember, what it says on the policy TRUMPS what your will may say!
Frequently Asked Questions
-
Generally 20-50%, but current income levels and support of both parties are up for consideration in this figure.
-
Money in an account is fungible; meaning if you have multiple sources of income going into the account the creditor can take the money in the account since who is to say the money they took really was your VA disability? While yes, you can fight it out with the bank it can be a big pain.
If you fall into this situation you should open up a new bank account and have ONLY your VA disability money go into the account.