When Can VA Disability Benefits or Veterans' Earnings Be Garnished?

Veterans who've qualified for cash benefits from the VA for service-connected disability, military pension, concurrent retirement and disability payments (CRDP), or combat-related special compensation (CRSC) may be surprised to learn that those benefits aren't necessarily exempt from remedies required to repay a debt. As with civilian wages, veterans' monetary benefits can, in certain circumstances, be withheld in order to satisfy an outstanding legal obligation.

Likewise, working veterans may have their earnings reduced if they don't respond to a VA notice telling them that they owe the agency money—for example, if the VA made an overpayment of cash benefits or an educational advance is past due. It's important to address these situations early on in order to avoid wage garnishment.

What is Garnishment?

Garnishment is a legal remedy that allows somebody to satisfy a debt owed to them by taking a portion of any income going to the person who owes them money. Garnishment is usually mentioned in terms of wages, where your employer will hold back some of your earnings and give them directly to the creditor, but the VA can also withhold part of your cash benefits for payment of the debt.

What Types of Debt Can Your VA Benefits Be Garnished For?

VA disability compensation is statutorily protected from garnishment in most cases because those benefits were intended by Congress specifically to provide support for disabled veterans and their dependents. But for some debts, the VA is allowed to garnish an amount of your (nontaxable) disability compensation equal to the amount of any (taxable) military retirement that you waived in order to get the disability payments. (5 CFR 581.103(c)(7))

Child Support and Alimony

Owing child or spousal support—also called "maintenance" or "alimony"—payments is one of the few acceptable reasons to garnish VA benefits. The VA will decide how much of your disability compensation can be garnished for child or spousal support without causing you "undue hardship." State laws regarding distribution of assets following a marriage dissolution also come into play. For more detailed information, see our article on child support and alimony garnishments of VA benefits.

Credit Card Debt

Credit card companies can't come after your VA benefits. (38 U.S.C. § 5301 (a)(1)) This prohibition also applies to common forms of private debt, such as medical bills, personal loans, and car leases.

Lawsuits

Any monetary judgments against you as a result of a lawsuit you lost can't be garnished from your VA benefits. So, for example, if you're being sued for negligence by another person injured on your property and you're found to be at fault, the judgment can't be collected from your VA disability compensation.

How Much Can Be Taken From Your VA Benefits?

There are federal and state laws that limit how much can be taken out of your VA benefits. Typically, between 20% and 50% of VA benefits may be garnished. Less than 20% is considered to be an insufficient amount for a veteran's dependents, and more than 50% is considered to cause undue hardship to a veteran.

Who Decides If Your VA Benefits Are Garnished?

Garnishment of VA benefits for child support or alimony is decided by a state court, usually during divorce proceedings or in response to a request for modification of support obligations. A copy of the court order will then be sent to a finance officer at the VA for processing and enforcement.

The finance officer will determine the amount to be withheld from the VA benefits and notify the veteran of the pending garnishment, along with a copy of the garnishment order, a description of the garnishment process, information about monthly garnishment limitations, and decision review rights.

Can the VA Garnish My Wages?

Working veterans may find that they owe a debt to the VA itself. This usually happens when the VA makes a benefit overpayment, like giving you too much in monthly disability compensation, or if you got health care at a VA facility but you didn't make a required copayment. Overpayments can also occur if you received a tuition advance as part of an education benefit and didn't repay the fee.

Because VA disability compensation is based in part on whether you have a spouse or dependents, you may incur an overpayment if you didn't report a life change that affects your compensation amount. Even if you did report a change in your living situation, the VA might not be able to update your benefit amount before the next disbursement date, resulting in an overpayment.

If you're contacted by the VA's Debt Management Center, don't just blow them off. After 180 days have passed without hearing from you, the VA (or the Department of the Treasury) will seek to collect the debt. That means that the VA or the IRS—a section of the Treasury Department—can order your employer to forward part of your earnings directly to the government in order to satisfy your debt. (38 CFR § 1.923)

Your Rights as a Veteran

Before the VA can garnish your wages, the agency has to give you written notice of its intent to do so. The VA is required to send you this notice 30 days in advance of taking action to garnish your wages. This notice must include the amount of the debt, what the debt is for, and a statement of the VA's intent to make deductions from your pay until the debt is paid in full.

The notice should also explain your right to enter into a written repayment plan to avoid wage garnishment. You can also hold a hearing, either to dispute the debt or work out a payment plan. (This is for proposed plans only, not payment plans previously established between yourself and the Debt Management Center.) You have the right to review and make copies of all VA paperwork relating to the debt.

Requesting a Wage Garnishment Hearing

You have 15 days from the time you receive the garnishment notice to submit a hearing request. If you ask for a hearing within this time frame, your wages can't be withheld until after the hearing is over and a decision has been made to garnish your earnings. You can still submit your hearing request after 15 days are up, but your wages will start being withheld immediately (unless you can show that the delay was due to circumstances beyond your control).

When you ask for the hearing (appeal the garnishment action), you have the right to request either an in-person hearing or a telephone hearing. You will then receive a letter telling you when the hearing will be and the deadline for submitting new evidence for your hearing.

Garnishment Hearing Procedure

Wage garnishment hearings are held by VA hearing officials, who may also hold hearings for other government agencies. If the hearing official believes the debt dispute can be resolved by a review of the documentation only, the VA will have a "paper hearing." This means that the hearing officer reviews your file and issues a decision based on the written record alone. You won't need to testify, whether in person or remotely.

If your case can't easily be resolved, you'll need to attend a scheduled hearing. You don't get any say in the date or time of the hearing, and it is very important to show up. Otherwise, unless you can show "good cause" (a reasonable explanation for your absence), you'll lose your right to have a hearing.

The hearing will be face-to-face or over the telephone. It's an informal hearing, but if you or any other witnesses testify, an oath is required. A transcript of the hearing is not created, but the hearing officer must write a summary of the hearing. Your travel expenses for getting to the hearing will not be reimbursed, but if you have a phone hearing you will not have to pay the phone expenses.

Evidence Reviewed at the Garnishment Hearing

The VA (or the IRS) will present evidence proving that you owe a debt and what the debt amount is. After that, you have the opportunity to show that you don't owe any money or that the amount of debt alleged is incorrect. You have to prove this by a preponderance of the evidence—meaning that you'll need to establish that it's "more likely than not" that the relevant agency is incorrect about how much debt you owe or whether you owe any debt at all.

If you have a repayment deal, you can also submit evidence showing that the terms of the repayment deal are illegal or create financial hardship, or that it is illegal for the debt to be collected (if applicable to your case).

Decision of the Hearing Officer

You have the right to receive a decision as soon as possible after the hearing, and no later than two months after the VA received your original hearing request. The decision will contain:

• a summary of the facts presented at the hearing
• the hearing officer's findings, analysis, and legal conclusions, and
• details of any repayment schedule agreed on.

Once a final decision is made to proceed with the garnishment, then a wage withholding order will be sent to your employer within 30 days of the decision. You have the right to request a review of the dollar amount being garnished out of each check, but you can't do so until actual garnishment has occurred.

Can I Request an Adjustment of the Garnishment Amount?

Whether you need to adjust the amount of your VA benefits going towards family support or modify how much money from your paycheck is withheld for VA debt obligations, you'll have to establish changed circumstances that make the current garnishment terms inequitable.

Generally, that means showing a significant alteration in your financial circumstances, such as disability, divorce, or terminal illness. You must be able to show that due to your changed circumstances, you're unable to provide shelter, food, or other basic needs for yourself and your family while the garnishment is in place.

How to Stop Your VA Benefits or Wages from Getting Garnished

Garnishment of benefits or earnings is often a "last-resort" remedy for settling a debt obligation. You might not be able to stop the garnishment entirely until your debt is paid, but you still have certain rights that prevent the government or a private entity from taking all your money as repayment.

If you think that your wages or benefits are being garnished unfairly, consider hiring an attorney with experience in the relevant area of practice for your situation. For example, if your VA benefits are being garnished 75% for child support—an amount well above what is typically considered "undue hardship"—you may want to contact an attorney who specializes in family law or has experience dealing with the VA. Working veterans may want legal advice on proper wage garnishment procedures, and veterans who are struggling financially might benefit from a consultation with a debt relief or consumer protection lawyer.