KNOW YOUR RIGHTS: VA DEBT COLLECTION
Know Your Rights is a Legal Aid Society educational series that provides helpful information on a variety of relevant topics. This issue, we talk VA DEBT COLLECTION!
Written by Legal Aid Society Attorney Frank Bencomo
Here’s what you need to know.
If Veterans Affairs contacts you stating that you’ve been overpaid benefits and thus owe them a large sum of debt, it’s essential to understand your rights under the law. Title 38 of the Code of Federal Regulations lays out how veterans can seek relief from sudden debt charges.
How is VA Overpayment Debt made?
VA overpayment debt is created when there's an over-disbursement of benefits, to the beneficiary (the veteran themselves), often resulting from changes in a veteran's status, such as a change in income, household composition, or unreported changes in social security benefits. It can also stem from administrative errors or misunderstandings about eligibility criteria. Often, beneficiaries unknowingly receive more benefits than they're entitled to due to delays or inaccuracies in reporting information. These overpayments lead to debts that the VA will attempt to collect on.
What are some potential consequences of VA Overpayment Debt?
Not paying VA overpayment debt can lead to several consequences:
Withholding of Benefits: The VA may withhold or reduce future benefits to recover the owed amount. This can affect your monthly payments, leaving you with less income until the debt is repaid.
Debt Collection: If the debt remains unpaid, the VA may refer the debt to the Treasury Department or a collection agency. This can result in increased pressure to repay the debt and might involve additional fees or charges.
Credit Score Impact: Unpaid debts can negatively impact your credit score if they are reported to credit bureaus. This can affect your ability to secure loans, mortgages, or credit cards in the future.
Legal Action: In extreme cases where efforts to collect the debt have been unsuccessful, the VA may take legal action to recover the amount owed. This could result in court proceedings and additional legal expenses.
Loss of Eligibility: Failure to address overpayment debt can jeopardize eligibility for future VA benefits or services. Resolving the debt is often necessary to maintain eligibility for various VA programs.
It's crucial to address VA overpayment debt promptly to prevent these consequences. Seeking assistance to resolve the issue can help mitigate the impact on your benefits and financial situation.
What are my options when I get a notice of VA Overpayment Debt?
When you receive a notice of VA overpayment debt, there are several options available to address the situation:
Review the Notice: Carefully go through the notice to understand the reason for the overpayment and the amount owed. Ensure that all the information provided is accurate and reflects your situation correctly.
Appeal or Request Reconsideration: If you believe the overpayment is incorrect or if there are extenuating circumstances, you can appeal the decision or request a reconsideration. You may need to provide additional documentation or evidence to support your case.
Set Up a Repayment Plan: If the overpayment is valid, you can work with the VA to establish a repayment plan. This can involve paying the debt in full or setting up a payment schedule based on your financial situation.
Request Waiver of Debt: In certain situations where repayment would cause financial hardship, you can request a waiver of the debt. This typically requires demonstrating that repaying the debt would be unjust or not feasible for you.
Seek Assistance: Consider reaching out to a Veterans Service Organization (VSO) or legal aid for guidance and assistance in navigating the process. They can provide valuable advice and support in dealing with overpayment issues.
Communicate Promptly: Respond to the notice within the specified timeframe and maintain open communication with the VA. Ignoring the notice or delaying response could lead to further complications. A response within 30 days of receipt can help prevent benefits being withheld while you request an appeal/waiver.
What factors can help me with a waiver of VA overpayment debt?
Requesting a waiver of VA overpayment debt involves demonstrating specific factors that contribute to financial hardship or would make repayment unfair. Here are some factors that could support your request for a waiver:
Financial Hardship: Show that repaying the debt would cause significant financial hardship. This could include evidence of low income, high essential expenses, or unexpected financial burdens.
Inability to Pay: Provide documentation indicating that you lack the means to repay the debt. This might involve proof of income, assets, expenses, and other financial obligations.
Fault of the VA: If the overpayment occurred due to VA errors or misinformation provided by VA representatives, highlighting these inaccuracies can strengthen your case for a waiver. If fault for an overpayment cannot clearly be ascribed to the beneficiary, VA's policy is to assume that fault and not create a debt against the beneficiary. The VA has a liberal policy that, whenever the evidence of record is equally susceptible of being interpreted as showing a lack of knowledge by the beneficiary and as showing that he or she knew but failed to disclose material facts to VA, the doubt will be resolved in the beneficiary's favor.
Good Faith: Demonstrate that you received the overpayment in good faith, unaware of the mistake, and that you used the funds in a way that would make repayment difficult.
Health Issues or Disability: If you have health issues or a disability that affects your ability to earn or manage finances, provide medical documentation to support your claim.
Unjust or Inequitable Repayment: Explain any circumstances that make repaying the debt unjust or inequitable, such as reliance on the overpaid funds for necessary expenses or changes in your financial situation.
Length of Time Since Overpayment: If significant time has passed since the overpayment occurred, you might argue that repaying it now would cause undue hardship due to changes in circumstances.
When requesting a waiver, provide as much relevant documentation and detailed explanation as possible to support your case. Being thorough in your communications with the VA can strengthen your request for a waiver of the overpayment debt.
What is usually included a in a packet requesting a waiver?
The information below is put together and mailed to the response address provided on the original letter received from the VA informing you of the debt.
A cover letter explaining your situation.
A Financial Status Report (VA Form 5655) to demonstrate how it’s not feasible to repay the debt.
A Statement in Support of Claim (VA Form 21-4138) – must be read by VA representatives and can be used to tell your story.
(If someone is preparing the form for you) An Appointment of Individual as Claimant's Representative (VA Form 21-22a).
If you have an issue with your VA overpayment Debt and need representation or need assistance navigating the process of appear/waiver, please click here or call 502.584.1254 to apply for Legal Aid Society services.