Service members are entitled to pay and various allowances, as well as special incentives, scholarships, and bonuses. However, sometimes errors or changes in circumstances could prompt the government to seek to recover the value of that benefit, commonly called recoupment.

Oftentimes, recoupment could be in the hundreds of thousands of dollars and paying such an exorbitant amount can seem unfair and financially daunting. If you do not pay, Uncle Sam can and often will take money from your Social Security, tax returns, and paycheck. The government might also tack on a nearly 30% fee if you do not promptly make payment. Therefore, knowing what to do if you receive notice of a debt or money being deducted from your pay can help you avoid errors that could cost more than what was originally owed, or even prevent the recoupment.

Allegations of indebtedness can come from various sources, so the first thing you need to do is understand why you are in debt. If you are currently in the military, you should direct your questions to your local finance or payroll office. If you are no longer in service, the Defense Finance Accounting Service (DFAS) will likely be your primary point of contact.

The debt could be a result of an overpayment; an erroneous payment or allowance; alleged misconduct; or recoupment of a bonus, scholarship or educational debt, among many other sources. Repayment or recoupment will often be sought, even if the debt was caused by government error. Ignoring these notices will not make the circumstances better. Quick action is often your best friend in these cases.

If you are currently serving, your service branch will collect the debt, and the process to seek either waiver or remission will have to be processed to the secretary of your service branch. If you have separated from service, then you will receive notice from your organization through their accounting agency (i.e., DFAS). Deciding what to do and how, will depend on (1) whether you are challenging the validity of the debt; (2) your status; and (3) your service branch. Regardless of whether you consider the debt valid, you may still want to request that it be waived or remitted.

Is the debt valid?

If you disagree with the validity of a debt, you may request a review. It is important to submit your request for review within 30 days of the issuance of the original debt notification letter. You may need additional information to support your dispute from the service branch, so it is critical that you respond quickly and request the supporting documentation. If this is done timely, then the government will usually stop any collection efforts during the decision-making process.

However, suppose you miss the 30-day deadline and/or you do not get confirmation that the collection process has been stayed. In that case, you will be expected to make payments during the adjudication process to avoid the addition of the afore-mentioned fee. If you fail to make payments, then the debt may be referred to the U.S. Treasury where there will be extreme penalties and interest assessed that often lead to wage garnishment and/or referral to a private collection agency. If you are successful in challenging the debt, the payments you make will often be returned to you after the favorable adjudication.

If you are still receiving compensation from the government, then debt payments will be deducted from your pay, and this also means that you may be entitled to request a hearing to dispute the debt.

When to seek a waiver or remission

If you believe that the debt is valid but there are circumstances that may warrant the government forgiving all or part of the debt, you may want to seek either a waiver or remission. A waiver is an act of the government to intentionally relinquish its claim against an individual for a debt resulting from erroneous payments of pay or allowances. To be eligible for a waiver, the debt must be the result of an erroneous payment of pay or allowance. The government may waive a debt if collecting it would be “against equity and good conscience” and is in the “best interest of the government.” Waivers usually apply to annuitants, veterans, and reservists.

If your debt was incurred during a period of active duty, then you are eligible to request remission by the Secretary of the military department you serve[d] in. Remission is the cancellation of a debt or portion of a debt. Like a waiver request, equity and good conscience (i.e. financial or personal hardship, a member’s value to the service, compassion, justice, and good faith) as well as the best interest of the government are the determining factors for a remission request. Remission applications are submitted directly to the service branch.

Whether you are disputing the debt, seeking a waiver, or applying for remission, you will need to support your request. You will need to offer evidence, and the types of documents or items you submit can vary based on the nature of the debt and whether you are seeking a waiver, a remission, or a review.

You cannot apply for a waiver or remission and dispute the validity of your debt at the same time. By requesting a waiver or remission you must also acknowledge that the debt is valid. So, if you believe that the debt you owe is not valid, you must first dispute its validity. There are often many potential legal defenses and arguments that can influence the choices you make and the end result.

Speaking with an attorney who has handled similar cases can help ensure that your rights are protected, that you do not make serious mistakes, and that you have the best chance of success.

Tully Rinckey attorneys understand that sometimes errors or changes in circumstances could prompt the government to seek to recover the value of a benefit. If you have additional questions about a notice of debt, or funds deducted from your pay, our team of attorneys is available to assist you today. Please call 8885294543 to schedule a consultation or schedule a consultation online.

Jonathan Gonzalez is an Associate in Tully Rinckey’s Austin, TX, office, focusing on veteran and military law. Jonathan has successfully advocated on behalf of his clients at the Discharge Review Boards and Board of Corrections for all five branches of the U.S. Armed Forces. Jonathan has also successfully negotiated discharges from the Armed Forces obtaining the most favorable discharges his clients can receive.