Getting Overpayments of Veterans Benefits Waived

Many instances of VA overpayment are the result of administrative error. The agency may have calculated your disability compensation based on having two dependent children instead of one, for example, or simply may have processed your benefit payments twice. In 2021, Congress introduced H.R. 5931, the VA Overpayment Accountability Act, to streamline benefits administration and reduce administrative errors, but the bill has yet to be signed into law.

If you receive an overpayment letter from the VA stating that you owe a debt, you're probably concerned. You fought hard to get the benefits you have, and you need the money that has been awarded to you. Fortunately, veterans have several remedies available to them to help manage VA overpayments—and in some instances, can get the debt canceled entirely.

Notice of VA Benefit Related Indebtedness and Overpayment

The VA corrects overpayments made to veterans by withholding the indebted amount from future benefit disbursements until the veteran is no longer in "arrears" (owes money). That means that the VA will seek to reduce your monthly check by a certain amount until the agency is paid back for the money it gave you in error.

The VA can't just take money out of your check, however. Procedural due process requires that government agencies take certain steps before they can deprive you of property, including benefits (such as disability compensation) that you reasonably expect will continue. One of these steps involves notifying you about an adverse action, so you'll get a letter from the VA Debt Management Center (DMC) with the total estimated amount of the overpayment, the monthly amount to be withheld, and the first month when your check will have the payment taken out.

Requesting a VA Overpayment Waiver

Depending on your current financial situation and the size of the VA's error, you might find the overpayment amount to be manageable. But certain "high-dollar overpayments" can result in thousands of dollars owed to the VA, which can take quite the financial toll on veterans who rely on their monthly benefit check to meet basic needs. If you can't repay the total amount on the notice of overpayment, you ask the VA to forgive ("waive") part or all of the debt.

Deadlines for Requesting a VA Overpayment Waiver

Send your waiver request to the VA as soon as possible after you get notice of the overpayment. If your request is submitted within 30 days from when you receive your debt letter, you'll continue to receive your full benefits—nothing withheld—while your request is being processed. (This normally takes many months.)

But if you wait longer than 30 days to ask for a waiver, the VA will begin withholding the stated monthly amount on the date scheduled in the notice until it makes a decision on your request. Then, if the waiver is granted, you'll receive a retroactive lump-sum payment to restore the withheld money to you.

You have the right to request a hearing where you can explain why you need the waiver or why you disagree with the amount (or existence) of the overpayment. If you request a hearing, the VA won't issue a decision on the waiver request until after a hearing is held.

Whether or not your benefits will be withheld during the decision waiting period, the VA will only consider overpayment waiver requests within 1 year of when you receive your first debt letter. The agency is legally required to deny any waiver requests received after that time.

VA Overpayment Waiver Forms

In order to request a debt waiver, you'll need to submit a financial status report (VA Form 5655) along with a letter that explains why your debt should be waived. The financial status report asks you questions about your current employment, expenses, assets, and other monthly debts. The letter can be submitted on VA Form 21-4138, Statement In Support of Claim.

Don't forget to submit Form 5655— if you don't provide the VA with a financial status report at all, your request for a waiver will be denied. It's best if you submit both forms 5655 and 21-4138 together when possible to avoid potential delays.

What to Include in the Debt Waiver Letter

You can use the comments section of Form 21-4138 to tell the VA why your overpayment should be waived. Explain that if the agency withholds your benefits, you won't be able to pay housing expenses or buy food or other basic living essentials. Your letter will be most persuasive if you address some of the main factors the VA will review to determine whether to waive your overpayment.

Factors the VA Considers When Deciding to Grant Waiver Requests

Under 5 U.S.C. § 5584, the VA is allowed to grant waiver requests when collecting the debt would be "against equity and good conscience, and not in the best interest of the United States." The statute also says that the VA cannot grant a waiver request if the agency believes that there is any "fraud, misrepresentation, fault, or lack of good faith" by the person asking to have their debt canceled.

Assuming that everything is on the up-and-up, the VA will consider the following six elements to determine whether it would be against equity, good conscience, and national interest to collect the overpayment from you:

• Were you at fault? For example, did you fail to report an increase in income that would have disqualified you from receiving a VA pension?
• Was the VA at fault? Did you properly report an increase in income but the VA didn't reduce your benefits for several months?
• Would it cause you "undue hardship" to pay back the VA? If your benefits were withheld, would you be able to pay for housing, food, utilities, and clothing?
• Would it defeat the purpose to withhold the benefits? Would withholding not make sense because the benefits were given to you specifically to make sure your basic needs are met?
• Would you be "unjustly enriched" if the VA didn't collect the overpayment? Would you have a big sum of money in excess of what you need to take care of yourself?
• Did you rely on the benefits to make a "detrimental" decision? Is it unfair to collect the debt because you relied on the benefits when incurring a legal obligation such as a mortgage?

The above six factors, while important, aren't intended to be all inclusive. (38 CFR § 1.965). So If you have another good reason not mentioned above as to why you should have your overpayment waived, address this reason—along with the listed factors—in as much detail as you can in your waiver request.

If the 30-day deadline is fast approaching, you can submit a quick statement saying that you disagree with the overpayment and want a waiver. Then you can write a more thorough statement and submit it shortly afterward.

What to Do if Your Request for a Waiver Is Denied

Once the decision is made on your request for an overpayment waiver, the VA will mail you a letter telling you what the outcome is. You'll either receive a full waiver (meaning you don't have to repay any of the overpayment), a partial waiver (part of your debt is forgiven), or a denial (you'll need to repay the full amount of the overpayment).

Veterans who receive a partial waiver or a denial will be contacted by the Debt Management Center to set up a payment plan. This typically involves the VA withholding a smaller amount from your monthly benefit check so you can still meet your basic needs. You can also appeal the VA's decision. If you win the appeal, benefits withheld during the appeal will be restored to you in a retroactive payment.

Is There a Statute of Limitations on VA Overpayments?

No, the VA doesn't have a statute of limitations on collection of overpayment of benefits. The provision of the U.S. Code that allows for government agencies to collect a debt owed to them by way of administrative offset—withholding portion of the benefit to satisfy the debt—states that there is no limitation on the period during which an offset may be initiated. (31 U.S.C. 3716 (e)(1)).

Can the VA Go After Social Security Benefits for Overpayment?

Yes, in certain circumstances. If you owe the VA money and you don't pay (or set up a payment plan) within 120 days, the VA is legally obligated to refer your debt to the U.S. Department of the Treasury, which may keep part or all of your federal or state payments—including Social Security benefits—to pay down your debt.

How Do I Pay Back a VA Overpayment?

If you agree that the overpayment exists, you don't dispute the amount, and you won't be financially burdened by paying back the VA, you can manage your debt online. You'll create a Login.gov or ID.me account through which you can check the amount of any debt related to disability compensation, pension, tuition, or medical co-pays. You can then pay back any benefit debts (disability, pension, or education assistance) at Pay.va.gov. Co-pay bills (for services at VA health facilities or in-network providers) can be paid at Pay.gov.

You don't need a lawyer to use the above repayment methods. But veterans who have very hefty overpayments may want to talk to a lawyer who has experience dealing with the VA. Veterans who are struggling financially and have debt that's gone to collections might also benefit from a consultation with a debt relief or consumer protection lawyer.