An overpayment made by the VA essentially means that the veteran owes the VA money. If the VA determines that there was a payment made to a veteran that was greater than the amount that should have been paid, there is a debt created. This debt is referred to as an overpayment. If a veteran finds themselves facing an overpayment issue there are certain actions that may take. This includes:
- Dispute the validity or amount of the debt
- Request a waiver of collection of the debt
- Request a hearing on the waiver request
- If the VA denies the waiver request or denies the veteran’s challenge to the validity/amount, the veteran may appeal that denial.
- Make an offer to compromise
The VA has to send a veteran written notice when there has been an alleged overpayment. This notice must include the following:
- Exact amount of the overpayment/debt
- The reasons behind the overpayment/debt (This must be provided in simple and clear language.)
- The rights and available remedies available to the veteran
- Inform the veteran on how the debt can be paid back to the VA (collection of the debt can be made through an offset of the veteran’s current or future benefits.)
Disputing the Validity or Amount the VA says you were overpaid
If the veteran chooses to dispute the validity or amount of the overpayment, the VA is required to “review the accuracy of the debt determination.” The veteran should request that the VA send a copy of how they calculated the overpayment. If the dispute is filed within 30 days of receipt of the notice of overpayment, the VA cannot collect on the overpayment until the dispute is resolved. When the VA gets the dispute, they will issue a Statement of the Case (SOC) on the issue of the validity of the debt.
Requesting a Waiver from VA
A waiver is basically a cancellation of the overpayment that the VA says you owe. If the VA grants a request for a waiver, then the veteran’s future benefits will not be withheld. If the veteran wants to request a waiver of the overpayment, they must do so within 180 days from the date on the notice from the VA. Just like with disputing the overpayment, if a request for a waiver is submitted within 30 days of receiving the notice, the veteran can continue to receive their full benefits while the request is being processed. If the request isn’t submitted within the 30 days, then the VA will start to withhold monthly benefits on the date specified in the notice while they decide the request. When deciding whether to waive the overpayment, VA regulations state that “there shall be no collection of an overpayment, or any interest thereon, when it is determined that a collection would be against equity and good conscience.” Equity is basically whether it would be unfair, or unjust, to the veteran if the VA denied the waiver. The term “good conscience” boils down to looking at whether a reasonable person would feel uneasy about reducing the veteran’s benefits based on that veteran’s specific circumstances.
The VA will look at 6 different factors when making their determination on whether to grant a veteran’s request for a waiver. These 6 factors are:
- Fault of the veteran: The overpayment occurred because of something the veteran did or didn’t do. For example, a veteran who was receiving money for their spouse becomes divorced and forgets to tell the VA. The VA will look to see if there was any “bad faith” on the part of the veteran. Simply put, did the veteran mislead the VA?
- Fault of the VA: This might be as simple as the VA made an error in the amount they paid you and ended up paying you too much, or they forgot to change your marital status after a divorce.
- Undue Hardship: Undue hardship would exist if the veteran would not have enough money to pay for food, clothing, shelter, and other essentials if the VA were to stop or reduce that veteran’s monthly payments.
- Purpose for which benefits were originally awarded: The VA considers whether collecting the overpayment would defeat the purpose for which the benefits were originally awarded to the veteran. This factor typically is relevant in VA pension cases.
- Unjust enrichment: Unjust enrichment is when someone unfairly gets a benefit simply by chance, mistake, or another’s misfortune. In other words, the person that has been unjustly enriched has been allowed to profit at another’s expense and it would be ethically or morally wrong to keep the benefits.
- Change of position for the worse: This is best described with an example. If a veteran has taken out a loan with the expectation that they would be able to make the payments on that loan because of their VA benefits, that veteran has now changed their financial position for the worse.
Remember, these are all just FACTORS the VA looks at. There is no single factor that requires the VA to grant or deny a request for a waiver.
Requesting a Hearing
If a hearing is requesting within 30 days of receiving notice of the overpayment, the VA is supposed to continue paying monthly benefits at their current rate. If the VA does not follow this rule, they must restore the veteran’s payments, ensure the hearing is scheduled, and notify the veteran (and his representative) that their action was made in error.
An Offer to Compromise
Another option for a veteran facing an overpayment issue is to offer a compromise payment to the VA. This is an offer to pay an amount less than the total overpayment or debt in order to settle the issue. If the overpayment or debt is less than $100,000 then the VA has the authority to decide whether they will compromise or not. A veteran can ask to compromise at any time after getting a notice of overpayment. However, if you submit a request to compromise AFTER you submit a request for a waiver, the VA will consider the offer to compromise first. The VA looks at 5 factors when deciding whether to accept an offer to compromise:
- Will the full overpayment/debt be repaid in a reasonable time?
- The age, health, current income, and future income of the veteran.
- Whether the veteran is likely to inherit any money?
- The assets the veteran has that could be used to pay the debt.
- What the costs of collecting the debt are.
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