5 things veterans need to know about debt lawsuits

Before a creditor can obtain a default judgment, the plaintiff is required to file an affidavit with the court establishing whether the defendant is an active military member.

Service members and veterans experience the same financial hardships as any other American. Unforeseen accidents, loss of a spouse, business failure, unemployment – these are common life events that force veterans into debt.

When debt reaches a certain point, it can be difficult to overcome or bounce back. Unfortunately, this opens the door to debt collection efforts and debt lawsuits.

Veterans should know, however, that debt lawsuits do not mean the end of their financial security. There are actually several laws that protect veterans, as well as methods of defense against a debt lawsuit.

5 things veterans need to know about debt lawsuits

Here we discuss 5 things veterans need to know about debt collection lawsuits and how they can overcome debt challenges.

1. Veterans have rights if sued

Active duty military personnel and veterans have certain rights under the Military Civil Assistance Act (SCRA). The rights of service members and veterans who have recently retired from active duty include:

Before a creditor can obtain a default judgment, the plaintiff is required to file an affidavit with the court establishing whether the defendant is an active military member. They must provide evidence to support their claim.

  • Service members and veterans who did not appear in court are protected from default judgments until the court appoints an attorney to represent them.
  • Under certain conditions, the courts can suspend debt proceedings for at least 90 days.
  • If a judgment is obtained, the file can be reopened if the member is active or is within 60 days of the end of his service.

2. A debt collector cannot take your VA benefits

Generally, Social Security and Veteran’s benefits are exempt and cannot be garnished in a debt lawsuit. If the creditor gets a judgment against you, they can seize your bank account, but there are very specific protocols for not seizing VA benefits. For example, the bank or credit union should assess the account and identify Social Security payments, VA benefits, and other types of exempt income.

Once they identify them, they then need to ensure that the veteran has access to that amount of money, even if the account is seized. This ensures that veterans have access to exempt funds, which allows them to use their VA benefits for the cost of living.

3. There are laws to protect veterans from medical debt

In 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act came into effect. In May 2019, a section of the law amended the Fair Credit Report Act. The goal – to provide protections for military veterans facing certain medical debts. Specifically, veterans would receive debt protections from:

  1. Non-VA (Veterans Affairs) providers when care has been authorized;
  2. Medical debt that the VA incorrectly billed

The amendments require certain information to be excluded from the veteran’s credit report. The changes also prevented national credit reporting agencies (Equifax, Experian, etc.) from including certain medical debts in credit reports until the debt was at least one year old.

Photo by Erik Mclean from Pexels

To help protect veterans’ credit, credit reporting agencies must remove information about medical debts that are listed as “cleared”, “delinquent” or “in collection” once the debt has been paid. It also established better methods of disputing incorrect information on the credit report.

4. Bankruptcy Can Stop Debt Collectors and Help Solve Debt

Military service members may qualify for bankruptcy under the same guidelines as civilians. Chapter 7 and Chapter 13 are the most common forms of bankruptcy, but which type is best depends on the individual’s situation. Filing for bankruptcy for veterans has several advantages:

  • Free credit counseling and bankruptcy courses;
  • Bankruptcy can be complete in 4-6 months;
  • Most, if not all, debts can be discharged;
  • Veterans can keep their assets while filing for bankruptcy;
  • Filing for bankruptcy stops debt collection activities, even if a debt collection lawsuit has been filed;
  • Once the debts are cleared, veterans have a clean slate to rebuild their credit and financial security.

5. A Debt Defense Lawyer Can Fight on Your Behalf

Being sued is a stressful experience. Veterans need to know that they don’t have to face this battle alone. A debt defense attorney can help veterans understand and protect their legal rights, and find options for appropriate debt relief. Debt defense law firms like Daic Law help veterans explore defense options against a debt lawsuit, such as:

  • Establish whether or not the veteran actually owes the debt;
  • Search for any errors or omissions in the documents;
  • Determine whether contracts or credit agreements are valid;
  • Determine whether the statute of limitations has expired;
  • Investigate whether the debt collector provided proper notice;
  • Check whether the debt collector has applied all applicable payments, credits or set-offs;
  • Consider whether the plaintiff (creditor) can prove that the debt was properly assigned to them.

These potential defenses may seem complicated, but a debt defense attorney can help veterans fight for their rights and work toward an outcome that helps them regain financial stability.

Veterans deserve help with their debts

Unfortunately, many veterans struggle to support themselves and get the care they need. Veterans Affairs health care providers are notorious for inappropriate billing and coverage, and for not helping veterans get care. Many veterans also live on a fixed income, which makes it difficult to weather challenges such as medical bills, a change in income, or other major life events.

Veterans deserve every protection and opportunity to protect their legal rights. Debt lawsuits are stressful, but they don’t have to end in heartache. With the proper legal help, veterans can rest assured that their case is headed in the right direction.

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