When filing for bankruptcy people are often confused about which funds and assets could become available for debt satisfaction. Most debtors find that very little, if any, are at risk for liquidation. In fact, there are numerous bankruptcy exemption laws that protect certain funds and assets completely in the process. One example is veterans benefits.
Most funds and wages provided as the result of active or retired military service are protected in a bankruptcy filing. This generally includes active duty income, medical or health benefits, survivor benefits and retirement funds. Although these funds may be exempt from liquidation, they are required to be reported on the bankruptcy filing.
Assets and funds that are exempt from the bankruptcy proceeding are still required to be reported on a Schedule 1 form because the value of such items is important to the overall case. These funds and assets are still used to determine the overall financial situation of the debtor and will be used to calculate how much they may owe creditors, which is especially important in a Chapter 13 filing. The only time these funds would not be protected or exempt in a bankruptcy case is if they are to be garnished for purposes of satisfying back due child support, criminal or court fees or unpaid taxes.