38 U.S.C. § 5301 : US Code - Section 5301: Nonassignability and exempt status of benefits

Search 38 U.S.C. § 5301 : US Code - Section 5301: Nonassignability and exempt status of benefits

(a)(1) Payments of benefits due or to become due under any law
administered by the Secretary shall not be assignable except to the
extent specifically authorized by law, and such payments made to,
or on account of, a beneficiary shall be exempt from taxation,
shall be exempt from the claim of creditors, and shall not be
liable to attachment, levy, or seizure by or under any legal or
equitable process whatever, either before or after receipt by the
beneficiary. The preceding sentence shall not apply to claims of
the United States arising under such laws nor shall the exemption
therein contained as to taxation extend to any property purchased
in part or wholly out of such payments. The provisions of this
section shall not be construed to prohibit the assignment of
insurance otherwise authorized under chapter 19 of this title, or
of servicemen's indemnity.
(2) For the purposes of this subsection, in any case where a
payee of an educational assistance allowance has designated the
address of an attorney-in-fact as the payee's address for the
purpose of receiving a benefit check and has also executed a power
of attorney giving the attorney-in-fact authority to negotiate such
benefit check, such action shall be deemed to be an assignment and
is prohibited.
(3)(A) This paragraph is intended to clarify that, in any case
where a beneficiary entitled to compensation, pension, or
dependency and indemnity compensation enters into an agreement with
another person under which agreement such other person acquires for
consideration the right to receive such benefit by payment of such
compensation, pension, or dependency and indemnity compensation, as
the case may be, except as provided in subparagraph (B), and
including deposit into a joint account from which such other person
may make withdrawals, or otherwise, such agreement shall be deemed
to be an assignment and is prohibited.
(B) Notwithstanding subparagraph (A), nothing in this paragraph
is intended to prohibit a loan involving a beneficiary under the
terms of which the beneficiary may use the benefit to repay such
other person as long as each of the periodic payments made to repay
such other person is separately and voluntarily executed by the
beneficiary or is made by preauthorized electronic funds transfer
pursuant to the Electronic Funds Transfers Act (15 U.S.C. 1693 et
seq.).
(C) Any agreement or arrangement for collateral for security for
an agreement that is prohibited under subparagraph (A) is also
prohibited and is void from its inception.
(b) This section shall prohibit the collection by setoff or
otherwise out of any benefits payable pursuant to any law
administered by the Secretary and relating to veterans, their
estates, or their dependents, of any claim of the United States or
any agency thereof against (1) any person other than the indebted
beneficiary or the beneficiary's estate; or (2) any beneficiary or
the beneficiary's estate except amounts due the United States by
such beneficiary or the beneficiary's estate by reason of
overpayments or illegal payments made under such laws to such
beneficiary or the beneficiary's estate or to the beneficiary's
dependents as such. If the benefits referred to in the preceding
sentence are insurance payable by reason of yearly renewable term
insurance, United States Government life insurance, or National
Service Life Insurance issued by the United States, the exemption
provided in this section shall not apply to indebtedness existing
against the particular insurance contract upon the maturity of
which the claim is based, whether such indebtedness is in the form
of liens to secure unpaid premiums or loans, or interest on such
premiums or loans, or indebtedness arising from overpayments of
dividends, refunds, loans, or other insurance benefits.
(c)(1) Notwithstanding any other provision of this section, the
Secretary may, after receiving a request under paragraph (2) of
this subsection relating to a veteran, collect by offset of any
compensation or pension payable to the veteran under laws
administered by the Secretary the uncollected portion of the amount
of any indebtedness associated with the veteran's participation in
a plan prescribed in chapter 73 of title 10.
(2) If the Secretary concerned (as defined in section 101(5) of
title 37) has tried under section 3711(a) of title 31 to collect an
amount described in paragraph (1) of this subsection in the case of
any veteran, has been unable to collect such amount, and has
determined that the uncollected portion of such amount is not
collectible from amounts payable by that Secretary to the veteran
or that the veteran is not receiving any payment from that
Secretary, that Secretary may request the Secretary to make
collections in the case of such veteran as authorized in paragraph
(1) of this subsection.
(3)(A) A collection authorized by paragraph (1) of this
subsection shall be conducted in accordance with the procedures
prescribed in section 3716 of title 31 for administrative offset
collections made after attempts to collect claims under section
3711(a) of such title.
(B) For the purposes of subparagraph (A) of this paragraph, as
used in the second sentence of section 3716(a) of title 31 -
(i) the term "records of the agency" shall be considered to
refer to the records of the department of the Secretary
concerned; and
(ii) the term "agency" in clauses (3) and (4) shall be
considered to refer to such department.
(4) Funds collected under this subsection shall be credited to
the Department of Defense Military Retirement Fund under chapter 74
of title 10 or to the Retired Pay Account of the Coast Guard, as
appropriate.
(d) Notwithstanding subsection (a) of this section, payments of
benefits under laws administered by the Secretary shall not be
exempt from levy under subchapter D of chapter 64 of the Internal
Revenue Code of 1986 (26 U.S.C. 6331 et seq.).
(e) In the case of a person who -
(1) has been determined to be eligible to receive pension or
compensation under laws administered by the Secretary but for the
receipt by such person of pay pursuant to any provision of law
providing retired or retirement pay to members or former members
of the Armed Forces or commissioned officers of the National
Oceanic and Atmospheric Administration or of the Public Health
Service; and
(2) files a waiver of such pay in accordance with section 5305
of this title in the amount of such pension or compensation
before the end of the one-year period beginning on the date such
person is notified by the Secretary of such person's eligibility
for such pension or compensation,
the retired or retirement pay of such person shall be exempt from
taxation, as provided in subsection (a) of this section, in an
amount equal to the amount of pension or compensation which would
have been paid to such person but for the receipt by such person of
such pay.