For veterans facing financial hardship, the Veterans Affairs Servicing Portfolio (VASP) program is a lifeline designed to help them retain their homes. However, the program’s active bankruptcy exemption, which disqualifies veterans with ongoing bankruptcy cases from receiving assistance, creates a significant barrier for those most in need. But why should they remove it?
Here's why:
1. It Contradicts the VA’s Mission to Support Veterans
The Department of Veterans Affairs was established to care for those who have served our country. Denying assistance to veterans simply because they are in the process of bankruptcy undermines this mission. Bankruptcy often results from unavoidable circumstances such as job loss, medical debt, or other service-related financial struggles. Instead of offering support, the active bankruptcy exemption turns a blind eye to these challenges, leaving veterans to fend for themselves.
2. Bankruptcy Is a Legal Tool for Financial Recovery
Bankruptcy is not a sign of failure—it is a legal mechanism designed to help individuals regain their financial footing. Veterans in bankruptcy are actively working to stabilize their financial situation, making them ideal candidates for programs like VASP. Providing assistance during this process could help ensure long-term success in maintaining homeownership, which aligns with the VA’s goals.
3. Excluding Veterans in Bankruptcy Punishes Them for Seeking Help
Veterans who file for bankruptcy are often in dire circumstances, using the process as a last resort to restructure or discharge overwhelming debt. By denying them access to housing assistance, the VA effectively punishes these veterans for taking legal steps to address their financial difficulties. This approach creates unnecessary obstacles and can exacerbate their struggles.
4. Veterans Are Disproportionately Affected by Financial Hardship
Research shows that veterans face unique financial challenges, including higher rates of unemployment, medical expenses, and housing instability. These issues are often compounded by service-related injuries or mental health conditions. Removing the active bankruptcy exemption would acknowledge these realities and provide much-needed support to a population that has already sacrificed so much.
5. Preventing Foreclosure Saves Costs for Everyone
Foreclosure is a costly process—for the veteran, the VA, and the housing market as a whole. Allowing veterans in active bankruptcy to access VASP assistance could prevent foreclosures, saving money and reducing long-term housing instability. Stabilizing veterans’ finances during bankruptcy aligns with the VA’s goal of reducing homelessness among veterans.
6. It Promotes Equity and Fairness
The active bankruptcy exemption creates inequity within the VASP program by excluding a subset of veterans based solely on their financial status. Veterans who are actively working to resolve their financial difficulties should not be penalized for their efforts. Removing this exemption would ensure all veterans have equal access to housing support, regardless of their circumstances.
A Path Forward
To better serve veterans and uphold its mission, the VA should:
Eliminate the active bankruptcy exemption from the VASP program.
Collaborate with bankruptcy courts and trustees to align housing assistance with the bankruptcy process.
Provide tailored support to veterans undergoing bankruptcy to help stabilize their housing and financial situations.
Removing this exemption would not only reflect the VA’s commitment to serving all veterans but also ensure that those facing the greatest financial challenges receive the help they need to stay in their homes. By addressing this policy, the VA can take a meaningful step toward reducing veteran homelessness and reinforcing the nation’s promise to care for its heroes.
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