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 applica-
bility of the prohibition on assignment of veterans bene-
fits to agreements regarding future receipt of compensa-
tion, pension, or dependency and indemnity compensa-
tion, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Veterans Benefits and 
Pensions Protection Act of 2003’’. 
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress finds the following:
(1) In exchange for a lump-sum payment from 
a lender, some veterans are surrendering their rights 
to full future compensation benefits from the De-
partment of Veterans Affairs by assigning those ben-
efits to lenders. 
(2) Despite language in section 5301 of title 
38, United States Code, that states that payments 
of veterans’ benefits from the Department of Vet-
erans Affairs shall not be assignable and shall be ex-
empt from the claim of creditors, lenders are enter-
ing into contracts with veterans that require the vet-
eran to either give access to their benefit monies to 
the lender or pay the lender a percentage of their 
benefit payment each month. 
(3) The contracts for these credit transactions 
do not disclose information that is required to be 
disclosed under the Truth in Lending Act, including 
the amount financed, the finance charge, and the 
annual percentage rate (APR). Therefore, when 
signing the contract, the veteran cannot accurately 
determine the cost of credit obtained by the veteran. 
(4) As a result, those transaction agreements 
are detrimental to veterans as they are required to 
pay interest rates ranging from 39 percent to 106 
percent.
(b) PURPOSE.—The purpose of this Act is to clarify 
the definition of a veterans benefit assignment under sec-
tion 5301 of title 38, United States Code, in order to make 
illegal the credit transactions between veterans and lend-
ers in which the veteran gives the lender access to benefits 
payments either through an account or by the guaran-
teeing of monthly payments. 
SEC. 3. APPLICABILITY OF PROHIBITION ON ASSIGNMENT 
OF VETERANS BENEFITS TO AGREEMENTS 
ON FUTURE RECEIPT OF CERTAIN BENEFITS. 
(a) IN GENERAL.—Section 5301(a) of title 38, 
United States Code, is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(a)’’; 
(2) by designating the last sentence as para-
graph (2); and 
(3) by adding at the end the following new 
paragraph: 
‘‘(3)(A) For the purposes of this subsection, an 
agreement described in subparagraph (D) shall be deemed 
to be an assignment and is prohibited. 
‘‘(B) An agreement or arrangement for collateral for 
security for an agreement that is prohibited under sub-
paragraph (A) is also prohibited. 
‘‘(C)(i) A person who enters into an agreement that 
is prohibited under subparagraph (A), or into an agree-
ment or arrangement that is prohibited under subpara-
graph (B), shall be fined under title 18, imprisoned for 
not more than one year, or both. 
‘‘(ii) This subparagraph does not apply to a bene-
ficiary with respect to compensation, pension, or disability 
and indemnity compensation to which the beneficiary is 
entitled under a law administered by the Secretary. 
‘‘(D) An agreement described in this subparagraph 
is an agreement between a person who is a beneficiary 
entitled to compensation, pension, or dependency and in-
demnity compensation and another person under which 
such other person acquires for consideration the right to 
receive payment of such compensation, pension, or de-
pendency and indemnity compensation, as the case may 
be, whether by payment from the beneficiary to such other 
person, deposit into an account from which such other per-
son may make withdrawals, or otherwise.’’. 
(b) EFFECTIVE DATES.—(1) Subparagraphs (A) and 
(B) of paragraph (3) of section 5301(a) of title 38, United 
States Code (as added by subsection (a) of this section), 
shall apply with respect to any agreement or arrangement 
described in those subparagraphs, whether entered into 
before, on, or after the date of the enactment of this Act, 
and any such agreement or arrangement entered into be-
fore the date of the enactment of this Act is void and un-
enforceable as of such date. 
(2) Subparagraph (C) of such paragraph shall apply 
with respect to any agreement or arrangement covered by 
such subparagraph that is entered into on or after the 
date of the enactment of this Act. 
(c) OUTREACH.—The Secretary of Veterans Affairs 
shall, during the five-year period beginning on the date 
of the enactment of this Act, carry out a program of out-
reach to inform veterans and other recipients or potential 
recipients of compensation, pension, or disability and in-
demnity compensation benefits under the laws adminis-
tered by the Secretary of the prohibition on the assign-
ability of such benefits under law. The program shall in-
clude information on various schemes to evade the prohibi-
tion, and means of avoiding such schemes. 
(d) AUTHORIZATION OF APPROPRIATIONS.—There is 
hereby authorized to be appropriated for the Department 
of Veterans Affairs for each of fiscal years 2004 through 
2008 the amount of $3,000,000 for purposes of carrying 
out the program of outreach required by subsection (c).
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