Sections of Texas Bankruptcy Code
38, 3101
Texas bankruptcy law generally exempts veteran's benefits from seizure by creditors; both before and after the veteran has received the benefits. There are two major exceptions. The bankruptcy exemption may not apply when the benefits are spent on an investment that is defined as permanent under the bankruptcy code. Also, veteran's benefits that have been received by the beneficiary can be seized if there is a court order for child support.
For example: If a veteran who is filing for bankruptcy receives $800 a month in veteran's benefits a claim for child support can be filed in the court; but the benefits cannot be seized until they reach the veteran. In other words, once the veteran cashes the benefits check or deposits it into a bank account, the funds can be seized to satisfy child support payments.