Veterans shouldn't have to shoulder VA errors: VA debt collection must be improved

If your monthly income suddenly dropped by $1,500 — or even more — would you be able to weather the sudden change? For how long? For many Americans, a single unexpected financial hit like that would force them to borrow money or sell something; the prospect of seeing your monthly income suddenly and unexpectedly plummet for months — or even years to come — could be completely overwhelming. That is exactly what has happened to a significant number of veterans.

The Dept. of Veterans Affairs' Debt Management Center (shortened to “debtman” in their website’s URL, a naming convention that seems to bode ill for chances of a positive customer service experience) has sent out hundreds of thousands of notification letters in the past few years and collects over $1.6 annually.

To recoup overpayments, even those that occurred due to VA’s own accounting errors, the agency is currently allowed to withhold 100 percent of veterans’ monthly benefits until the full debt has been repaid, a disruption that can prove devastating.

Bipartisan legislation introduced last week in the Senate aims to address this issue: it would limit the amount of VA benefits that can be withheld from veterans’ benefits to 25 percent of their monthly payments and cap the amount of time during which overpayments can be recovered at five years.

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According to the Consumer Financial Protection Bureau’s Office of Servicemember Affairs, while the majority of these debts are related to health benefits, one in four veterans using the Post-9/11 GI Bill education benefit received an overpayment.

Veterans whose debt cannot be simply withheld from ongoing benefits will have their debt transferred to the Treasury department and negative reports sent to credit reporting agencies. Shockingly, as of January 2019, all VA debt notifications were still done by mail. In addition, the part of VA that generated the debt also provides the address to use to VA Debt Management — and since veterans may have no idea that they need to update their address with multiple departments within VA, the paper notice could go to an outdated mailing address even though the veteran notified a different VA office of their new address.

Veterans may learn about the debt “too late to engage their resolution options (e.g., appeal or payment plans).” Even those who learn about the overpayment in time encounter problems; OSA quotes an active duty servicemember’s complaint of VA continuing “to receive, acknowledge, and process payments up to and beyond the date the debt was transferred to Treasury,” delaying crediting an on-time payment to the account, and submitting a negative report to credit reporting agencies.

As Vice detailed, it can also be difficult for veterans to track down the underlying problem that caused the overpayment, much less to correct it if VA made the error. For troops and veterans who have security clearances, issues like this can also threaten their livelihoods.

VA should take immediate action to ease the burden on veterans, rather than waiting for the Veterans Debt Fairness Act to wend its way through both houses and make it to the president’s desk for signature.

Near-term fixes include having the Debt Management Center review best practices from other industries and immediately bring internal processes into the 21st century: Confirm what contact information is most current across business lines, and try phone or email methods of contact too (steps VA is “working toward”). VA should also consider its core mission and values, as well as the department’s enhanced focus on the veterans experience, when determining how to approach overpayments.

Veterans should not be paying this heavy a price for VA’s mistakes. 

Kayla Williams is a Senior Fellow and Director of the Military, Veterans, and Society Program at the Center for a New American Security. She previously served two years as Director of the Center for Women Veterans at the Department of Veterans Affairs, serving as primary advisor to the Secretary on policies, programs and legislation affecting women veterans. Prior to that, she worked at the RAND Corporation, where she did research related to veteran health needs and benefits, international security and intelligence policy. She is the author of “Love My Rifle More Than You: Young and Female in the U.S. Army,” a memoir of her deployment to Iraq.