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.