How the VA Garnishes Your Disability Pay (And How to Stop It)

Nothing ruins a day like a letter that says you owe money. But when that letter comes from the VA, it gets worse. Exponentially worse. 

Unlike a ticket you got from a traffic camera, you cannot ignore this one. The U.S. government will collect it from the same VA disability check you use to pay rent, buy groceries, and keep gas in your truck. 

This garnishing of your disability pay is what the VA calls an offset. 

If you’ve ever experienced an overpayment from the military, you know the government takes its money back by any means necessary, even if that means absolutely crippling you financially. The VA just does it with the money from your monthly disability compensation.

The pain is the same. If you ignore the debt letter, the VA can (and will) keep part, or even all, of a monthly benefit payment unless you make another arrangement. 

Most VA benefit debt starts the same way, and it’s usually pretty mundane. Maybe you didn’t report a life change in time, or maybe you reported it, and the VA didn’t adjust the payment before the next deposit. It’s also quite possible that the VA made the mistake. 

No matter how it happened, the VA believes it paid you more than you were eligible to receive. 

When your everyday life is happening, things can slip through the cracks. You might be going through a divorce, a dependent might be leaving school, you might be recalled to active-duty, go to jail, change majors, or simply get a raise because you crush it at work.

Any of these things (and more) can lead to an accidental overpayment. And you gotta fix it sooner rather than later.

The First Letter

It’s really important to open and read anything with the VA’s letterhead on the envelope. It’s usually a survey you have no desire to fill out, but if it’s an overpayment letter, you’ll need every bit of information inside. 

That first letter is a trip gong. A starting gun. The first tick in a race against time. You have 30 days from receipt of that letter to dispute the debt. During this period, the VA’s hired goons will have to stop any collection actions they intend to take. If you miss that window, they’re coming for you and they are not subtle. 

No matter what kind of debt, be it from VET TEC, healthcare copays, or GI Bill overpayments, you need to dispute it as soon as possible. 

3 Ways to Stop the Steal

Okay, it’s probably not really a steal if you were legitimately overpaid. But there are ways to stop the bleeding. You might think of the VA as a cold, unfeeling institution, but it does offer three good options for veterans who owe it money: fight it, request forgiveness, or make a deal. Bet you didn’t see at least two of those coming. 

The first option is to dispute the debt. This is the road to take if the debt is just wrong. The facts are wrong, the numbers are wrong, or the overpayment should never have existed in the first place. All you have to do is lay it all out in a simple statement, explaining why the debt is incorrect.

If the debt is a healthcare copay, you can sign in to your Ask VA account and dispute it there. Copays can also be disputed by mail or in-person. For all other debts, go to the VA’s dispute website, log in, and go to the mattresses. Make your statements simple, factual, and to the point.

You’re talking to a bureaucrat who potentially has to do this 100 times a day. They know the rules, and they don’t need a bunch of flowery language to follow those rules. So be concise, but be sure to fight. Channel your metaphorical Jim Mattis: “Be professional, be polite, but have a plan to kill everyone you meet.” Remember, that’s metaphorical. 

The second option is for when the debt actually is valid, and it’s also on a timeline. You have one year from receiving that first letter to request debt relief, also known as a waiver. This is what you request when the VA collection on that debt would absolutely destroy your household finances, your household, or maybe even your house. 

Again, the VA feels your pain. Okay, just kidding, the VA feels absolutely nothing at all, but it does acknowledge the possibility that a human might feel some kind of pain if they suddenly had no means to support themselves or their family. Its “Equity and Good Conscience” standard looks at six factors that “indicate a need for reasonableness and moderation.”
I swear that’s what it’s called:

“In making a determination, consideration will be given to the following six elements, which are not intended to be all-inclusive.

1. Fault of debtor. Where actions of the debtor contribute to creation of the debt.
2. Balancing of faults. Weighing fault of debtor against Department of Veterans Affairs’ fault.
3. Undue hardship. Whether collection would deprive debtor or family of basic necessities.
4. Defeat the purpose. Whether withholding of benefits or recovery would nullify the objective for which benefits were intended.
5. Unjust enrichment. Failure to make restitution would result in unfair gain to the debtor.
6. Changing position to one’s detriment. Reliance on Department of Veterans Affairs benefits results in relinquishment of a valuable right or incurrence of a legal obligation.”

In English, this basically means the VA will consider who caused the debt, whether the VA also should take some blame, whether repayment would create undue hardship, whether collection would defeat the purpose of the benefit, whether you were unfairly enriched, and whether you relied on the payments and changed your financial position because of them.

There are also three standards that will have your waiver request tossed out immediately: Fraud, misrepresentation, and bad faith. So don’t lie, shade the truth, or misstate your circumstances. Just present the facts with those six considerations in mind. 

Finally, there’s the art of the deal. You can offer a repayment plan or reach a compromise with the VA. What other cabinet-level federal office would make and offer like that? I’ll tell you the Department of Education will 100% never let you negotiate your student loans; you will have them until you pay them off or die trying. 

If your goal is a repayment plan and you think you can swing full repayment in five years, you can request a plan online, by phone, or by mail. If you need more than five years, you need to submit a Financial Status Report (VA Form 5655).

If you want to make a deal, this is called a compromise offer, which is a smaller one-time payment that will resolve your entire debt. You still need to submit a VA Form 5655 online, but you could pay much less.

Call the VA Debt Management Center at 800-827-0648, or snail mail it to: 

Debt Management Center

PO Box 11930, 

St. Paul, Minnesota 55111

Remember: simply tell them what you want, what your reasoning is, and that you submitted the necessary paperwork. Because you did, right?

Right?

Penalties for Missed Windows 

If the VA caused the overpayment due to an error, the department will not start involuntary collections for 90 days. This isn’t the time to breathe; it’s a reminder to get the ball rolling on those other options. 

After 120 days, the VA outsources its collections efforts to the U.S. Treasury, which absolutely does not care if paying your debts causes hardship. It’s there to break your metaphorical legs, your actual will, and your literal credit score. The Treasury adds fees and interest to what you already owe and will take all of it from your disability pay, tax returns, Social Security payments, salary, and/or retirement accounts. 

It becomes some evil, federal game of “Good Cop, Bad Cop,” because at that point, the VA won’t even talk to you about that debt anymore. 

Make an Appeal

No one wants to end up in Treasury hell, but some people do everything the right way and still get burdened with debt. Their requests for disputes, debt relief, or payment plans get denied. Even then, there are avenues for appeal.

If everything goes wrong, you can make a Supplemental Claim, request a Higher-Level Review, or a Board Appeal. If a waiver gets denied, you can ask the Committee on Waivers and Compromises to reconsider, and if you still disagree, you can request a Board Appeal. You have one year from the date on the decision letter to request that Board Appeal.A VA debt ain’t great, but it’s not the end of the world, it’s just the beginning of an ordeal. Don’t freak out and certainly don’t fall victim to a VA overpayment scam. All you need is a cool head, clear communication, and a sense of urgency. It also helps to gather the evidence you need.