Current and former military members can find themselves in debt to the Government for any number of reasons, often through no fault of their own. The culprit may be circumstances beyond your control, or even Government error. Unfortunately, the fact that the error originated with the Government will not stop them from seeking repayment.

Service members have options for challenging their obligation to repay both invalid and valid debts. With the right strategy, it may be possible to reduce or eliminate the money you owe the Government.

Common Causes of Military Service Member Debt

Alleged debts can come from various sources, so the first thing you need to do is understand why you are in debt. Common causes of service member debt include:

Overpayment of bonus, payment or allowance: Often results from administrative error, such as when a service member continues receiving an entitlement after no longer qualifying for that entitlement.

Recoupment of scholarship or other educational debt: Service members may receive benefits in the form of scholarships, stipends, or tuition assistance in exchange for fulfilling a contractual obligation—typically in the form of service. A change in circumstance may prompt the government to recover or “recoup” the value of that benefit. Recoupment is common with ROTC contracted cadets and SMART scholarship recipients who are unable to fulfill their contract terms or complete their work or service obligations.

Liability for Government property loss/damage: “Report of Survey” or FLIPL establishes the extent and cost of the damage to Government property entrusted to the service member, such as assigned family housing and furnishings, or arms and equipment. Typically involves neglect, misuse, or abuse.

TDY (Temporary Duty) Travel Costs Overpayment: Can happen if a service member receives advance travel allowance and does not complete the travel, or submits a DD Form 1351-2 with a claim for fuel costs when using a POV (personally owned vehicle).

DFAS Debt and Your Rights

Military service members and civilians who owe money to the Government have due process rights. While it is permitted to begin paying back a debt without first receiving due process, making payments does not mean you have waived your rights. These rights do not go away after payments begin. But before the Government can begin garnishing a debtor’s wages (reducing your paycheck to pay back the debt) or refer the debt to the Treasury Department or Department of Justice, due process must be provided (5 U.S.C. § 5514).

For current and former military service members, due process includes written notice of the debt, the opportunity to dispute the debt, and access to the records pertaining to your debt.

Written Notice

You must be notified of the debt in writing. The debt notification letter should contain the following information:

• Name and contact information for someone you may reach by mail, email, fax, or phone to discuss the debt
• The amount of the debt
• Explanation of the reason for the debt
• Legal authority for establishing the debt
• Grounds on which the debt was determined
• Payment due date (no sooner than 30 days from the first notification)
• Information on pursuing a needs-based payment plan
• Potential consequences of delinquency on the debt (e.g., collection methods like referring to debt collection agency or DoJ, wage garnishment, credit bureau reporting, etc.)

Opportunity to Dispute Your Debt

You have the right to challenge the validity of the debt itself or the amount of the debt. Requests for hearing or review must be made in writing.

If you request a review or hearing within the time indicated in the notification letter (usually 30 days from the issue date of the notice), debt collection will pause. You will not accrue interest or penalty charges until the review is concluded and a determination is made.

The reviewing/hearing official should provide you with a written decision within 60 days of your request.

If you already paid the debt in whole or part, voluntarily or involuntarily, and the debt is waived or determined to be invalid, you will be refunded.

Access to Information about Your Debt

You must be allowed to see the relevant DoD records used in calculating your debt. You should also be provided with the name and contact information for an agency point of contact to discuss your debt with.

Options for Challenging Your Debt

The three basic avenues for service members to reduce or eliminate a debt are:

Dispute/Review:

You are questioning the validity of the debt itself or questioning the amount.

Waiver:

The Government relinquishes its claim against you for a debt resulting from erroneous payments of wages or allowances, based on equity and good conscience, and the best interests of the Government.

Remission:

The Secretary of a Military Department cancels some or all of your debt.

Important Considerations

1. Your avenues for challenging the debt will differ depending on (1) your status; (2) your service branch; and (3) whether you are challenging the validity of the debt. The VA has its own unique processes for challenging debts and seeking waivers, which are not covered here.
2. Seek review first. If your request for a review is unsuccessful, you could then request a waiver or remission. But submitting a waiver application first waives your right to dispute the validity of the debt or amount in the future. If you have grounds to challenge the validity or amount of the debt, you must do so before applying for a waiver.

Do Not Ignore Your Debt

Ignoring debt notices will not make the circumstances better. Quick action is often your best friend in these cases. Responding timely and effectively to debt notification is critical to preventing errors that could increase the money owed. And in some cases, the right response strategy may reduce or eliminate the debt all together.

Debt should not take over your life. A conversation with an attorney can empower you with information on all your options, so you can act from a position of knowledge—not fear. Avoiding mistakes early on in the process provides the best chance of success.

The Military Law attorneys at Tully Rinckey PLLC were service members long before they became lawyers. They know the military, they know the law, and they are ready to fight hard on your behalf. To discuss a potential case, please call 8885294543 to schedule a consultation, or schedule a consultation online.

Heather Tenney, Esq., LL.M. is a Partner in Tully Rinckey PLLC’s military law, federal employment, and national security law practice groups. She currently serves as the primary attorney for consultation in these areas. Heather brought her skills as an advocate and negotiator to Tully Rinckey after honorably serving with the US Army’s JAG Corps, and the results speak for themselves. At the firm, she focuses on military law; federal employment, EEO and discrimination litigation; disciplinary investigation and MSPB litigation, disability retirement, and national security clearance representation. Heather’s representation in national security and security clearance cases range from high-level military officers to covert operation officers of the CIA, NRO, FBI, DIA and a range of other intelligence agencies. Heather currently serves as Treasurer for the National Security Lawyers Association (NSLA).