You must include it when computing the means test. The basic idea of the means test is to see what funds you have available to pay creditors on a monthly chapter 13 plan; if you can pay a significant chunk of your debts in a Chapter 13 then Congress figures you should do that instead of just getting to wipe your debts off the books with your creditors getting little or nothing. Since your VA disability benefit is part of the money you have available to pay your expenses, it is included with any other source of funds/benefits you have. Whether the source of the funds is taxable or not does not make a difference here. This is not a computation to determine what tax you have to pay. Note that the means test is based on what the IRS uses to determine a person’s ability to pay his/her delinquent tax obligations. The IRS includes all sources of funds in that computation, taxable or not, to figure what you can pay. If your only source of funds is $973/month and you don’t have a lot of assets then you should not have a problem passing the means test and won’t end up with an involuntary conversion to a Chapter 13.

