VA issues tens of thousands of payments each month; and sometimes, the payments are miscalculated. If a Veteran is paid more than they are owed by the VA, the VA will claim that the Veteran is indebted to the VA in the amount of the alleged overpayment. Currently, a VA debt management center in Wisconsin serves as the clearinghouse for VA debt collections. Unfortunately, it is difficult to communicate directly with the VA debt management employees, and they often do not provide detailed accountings or explanations prior to withholding or reducing payments stemming from a Veteran’s alleged indebtedness to the VA.
Even where Veterans have difficulty communicating with debt management personnel, there are still procedural protections for the Veterans; and good opportunities for Veterans to have their debt waived or forgiven altogether.
First and foremost, any Veteran seeking a debt waiver must be able to demonstrate that they have not acted in bad faith nor with fraudulent intent. Assuming that is the case, the VA then analyzes whether recovery of the debt would be “against equity and good conscience.” 38 U.S.C. § 5302(a).
In determining whether collection of the debt would be “against equity and good conscience”, the VA considers the following factors: (1) The Fault of the Veteran/debtor; (2) a balancing of the debtor’s fault against VA’s fault;
(3) any undue hardship to the Veteran/debtor by collecting the debt; (4) whether the purpose of the benefits would be defeated; (5) any unjust enrichment to the Veteran/debtor; and (6) whether the person seeking the waiver had detrimentally changed position in reliance on the benefit.
Many VA overpayments are related to mandatory reductions in benefits while Veterans are incarcerated. Being in jail is difficult enough; but upon release, a Veteran may then be notified that their direct deposits continued to go through to their account and their family used those funds for customary living expenses (rent, food, etc.).
Veterans who notify the VA they are facing incarceration will usually request the VA “apportion” their benefits to their family while they are in prison (which permits some portion of the benefits to be paid, as opposed to the full mandatory reductions). However, the VA sometimes does not properly process this information, allowing the request for apportionment to slip through the cracks; and then– often years later– claiming the VA is owed a significant figure due to alleged overpayments while the Veteran was in prison. Where the Veteran notified the VA prior to entering prison and requested apportionment for his family, and the VA dropped the ball, the Veteran should fight the debt issue and request full waiver.
When challenging a debt claim, Veterans should keep in mind that the VA may waive all or part of a debt, and where they are able to communicate with debt management personnel, propose partial waivers as means of potential resolution. Moreover, Veterans should keep in mind that debt waiver requests follow the same procedural process as other VA claims– meaning a Veteran must meet all deadlines for filing Notices of Disagreements, Form 9 appeals to the Board of Veterans’ Appeals, and potentially appeals to the Court of Appeals for Veterans’ Claims.