I 

108TH CONGRESS 

1ST SESSION H. R. 2975

To amend title 38, United States Code, to clarify the applicability of the 

prohibition on assignment of veterans benefits to agreements regarding 

future receipt of compensation, pension, or dependency and indemnity 

compensation, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 25, 2003

Mr. STRICKLAND (for himself and Mr. SHIMKUS) introduced the following bill; 

which was referred to the Committee on Veterans’ Affairs 

A BILL

To amend title 38, United States Code, to clarify the applicability of the prohibition on assignment of veterans benefits to agreements regarding future receipt of compensation, pension, or dependency and indemnity compensation, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Veterans Benefits and 

5 Pensions Protection Act of 2003’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—The Congress finds the following: 
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1 (1) In exchange for a lump-sum payment from 

2 a lender, some veterans are surrendering their rights 

3 to full future compensation benefits from the De4 partment of Veterans Affairs by assigning those ben5 efits to lenders. 

6 (2) Despite language in section 5301 of title 

7 38, United States Code, that states that payments 

8 of veterans’ benefits from the Department of Vet9 erans Affairs shall not be assignable and shall be ex10 empt from the claim of creditors, lenders are enter11 ing into contracts with veterans that require the vet12 eran to either give access to their benefit monies to 

13 the lender or pay the lender a percentage of their 

14 benefit payment each month. 

15 (3) The contracts for these credit transactions 

16 do not disclose information that is required to be 

17 disclosed under the Truth in Lending Act, including 

18 the amount financed, the finance charge, and the 

19 annual percentage rate (APR). Therefore, when 

20 signing the contract, the veteran cannot accurately 

21 determine the cost of credit obtained by the veteran. 

22 (4) As a result, those transaction agreements 

23 are detrimental to veterans as they are required to 

24 pay interest rates ranging from 39 percent to 106 

25 percent. 
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1 (b) PURPOSE.—The purpose of this Act is to clarify 

2 the definition of a veterans benefit assignment under sec3 tion 5301 of title 38, United States Code, in order to make 

4 illegal the credit transactions between veterans and lend5 ers in which the veteran gives the lender access to benefits 

6 payments either through an account or by the guaran7 teeing of monthly payments. 

8 SEC. 3. APPLICABILITY OF PROHIBITION ON ASSIGNMENT 

9 OF VETERANS BENEFITS TO AGREEMENTS 

10 ON FUTURE RECEIPT OF CERTAIN BENEFITS. 

11 (a) IN GENERAL.—Section 5301(a) of title 38, 

12 United States Code, is amended—

13 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; 

14 (2) by designating the last sentence as para15 graph (2); and 

16 (3) by adding at the end the following new 

17 paragraph: 

18 ‘‘(3)(A) For the purposes of this subsection, an 

19 agreement described in subparagraph (D) shall be deemed 

20 to be an assignment and is prohibited. 

21 ‘‘(B) An agreement or arrangement for collateral for 

22 security for an agreement that is prohibited under sub23 paragraph (A) is also prohibited. 

24 ‘‘(C)(i) A person who enters into an agreement that 

25 is prohibited under subparagraph (A), or into an agree-
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1 ment or arrangement that is prohibited under subpara2 graph (B), shall be fined under title 18, imprisoned for 

3 not more than one year, or both. 

4 ‘‘(ii) This subparagraph does not apply to a bene5 ficiary with respect to compensation, pension, or disability 

6 and indemnity compensation to which the beneficiary is 

7 entitled under a law administered by the Secretary. 

8 ‘‘(D) An agreement described in this subparagraph 

9 is an agreement between a person who is a beneficiary 

10 entitled to compensation, pension, or dependency and in11 demnity compensation and another person under which 

12 such other person acquires for consideration the right to 

13 receive payment of such compensation, pension, or de14 pendency and indemnity compensation, as the case may 

15 be, whether by payment from the beneficiary to such other 

16 person, deposit into an account from which such other per17 son may make withdrawals, or otherwise.’’. 

18 (b) EFFECTIVE DATES.—(1) Subparagraphs (A) and 

19 (B) of paragraph (3) of section 5301(a) of title 38, United 

20 States Code (as added by subsection (a) of this section), 

21 shall apply with respect to any agreement or arrangement 

22 described in those subparagraphs, whether entered into 

23 before, on, or after the date of the enactment of this Act, 

24 and any such agreement or arrangement entered into be-
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1 fore the date of the enactment of this Act is void and un2 enforceable as of such date. 

3 (2) Subparagraph (C) of such paragraph shall apply 

4 with respect to any agreement or arrangement covered by 

5 such subparagraph that is entered into on or after the 

6 date of the enactment of this Act. 

7 (c) OUTREACH.—The Secretary of Veterans Affairs 

8 shall, during the five-year period beginning on the date 

9 of the enactment of this Act, carry out a program of out10 reach to inform veterans and other recipients or potential 

11 recipients of compensation, pension, or disability and in12 demnity compensation benefits under the laws adminis13 tered by the Secretary of the prohibition on the assign14 ability of such benefits under law. The program shall in15 clude information on various schemes to evade the prohibi16 tion, and means of avoiding such schemes. 

17 (d) AUTHORIZATION OF APPROPRIATIONS.—There is 

18 hereby authorized to be appropriated for the Department 

19 of Veterans Affairs for each of fiscal years 2004 through 

20 2008 the amount of $3,000,000 for purposes of carrying 

21 out the program of outreach required by subsection (c).

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