Believe it or not, the VA has now become a debt collector. Many Veterans have received a debt letter from the Department of Veteran Affairs Debt Management Center, claiming that the Veterans have been overpaid. The VA wants their money back, or they’ll stop providing benefits. If you’re a Veteran, you may or may not have received this debt letter. But chances are someone you know has received this unfortunate piece of mail.
Our Veterans that served honorably are now getting kicked in the teeth by the VA Debt Management Center. Many of these Veterans are living on a fixed income and barely keeping their bills paid. Below we’ll discuss what you can do if you receive a VA debt letter.
Types of VA Benefits
Before we get into your options, let’s quickly distinguish the types of VA benefits available to Veterans. There are basically two types of income that the VA would pay a Veteran or Veteran spouse. There is disability compensation, which is paid for an in-service injury or a condition caused by toxic exposure during service. This is similar to workers compensation in the private sector. If you’re receiving disability compensation from the VA and you pass, your spouse or dependents can receive some disability compensation. We call that “DIC.”
Then you have VA Aid & Attendance, also called VA pension. Most of these debt letters have been geared towards recipients of the VA pension. VA pension is a means-based benefit. You can have too much income or too many assets if you want to receive this benefit. Disability compensation or DIC is not means-based.
What Does the VA Debt Letter Say?
Whether you’re receiving disability compensation or pension, you or your spouse paid your dues by serving our country. But now comes the kicker with the debt letter. According to the VA, you owe your country thousands of dollars because for some reason you were overpaid. The VA made a mistake when calculating your benefit and paid you the incorrect amount for many years. Now the VA has determined that they’ve made a mistake and they want their money back.
As mentioned above, many of these Veterans are on a fixed income and can’t afford to pay it back. They don’t have the assets to do it. But the VA doesn’t care. If you don’t pay it back, they’ll just take part of it by reducing your benefits. They’ll do this until the debt is paid in full.
This is extremely frustrating for me because I love helping Veterans and their spouses. These are my people. They’re just trying to survive on a limited income and now the VA sends a debt letter saying they’re going to cut their check. The VA is putting them in a position to decide between groceries, their heating bill, medicine, or food. They’re taking away Veterans abilities to afford basic necessities by reducing their benefits. They’re taking a monthly check of $2,500 and reducing it to a mere $500 or less.
Real Life Examples of VA Debt Letters
Let me give you a couple real life examples from clients of mine that have received a VA debt letter. One Veteran served in the United States Air Force and was stationed in Japan. He was a radio operator during the Vietnam War, but did not serve in Vietnam.
We filed a notice of intent to file on April 22, 2022 and filed his VA pension application about a month later. At this time he was 85 years old. We filed his pension application and then almost a year to the day he was awarded the maximum pension amount. I have no idea why it took so long, but it did. This guy had no assets and his income was close to zero. His wife was deceased but he had a disabled son.
You might think that’s the end of the story, but it’s not. This year the VA sent him a debt letter claiming that they overpaid this Veteran, citing an increase in his Social Security benefit and a reduction in his Medicare Part A. While I agree that those did occur, his income is still basically zero due to unreimbursed medical expenses. But the VA didn’t even bother to look at that.
If they would have looked in this file, they would have seen that his unreimbursed medical expenses still exceeded his income. This results in “income for VA purposes” of zero dollars. Now this Veteran is stressed because losing his pension would be devastating. He’s now 86 and still responsible for his disabled son.
Here’s the second Veteran client of mine that has experienced this travesty. I’ve known this gentleman for 7 or 8 years now and have helped him get the benefits he deserves. He just received a debt letter from the VA. His debt letter demanded that he owes a whopping $162,00 to the VA!
At the time of receiving the debt letter, he was 90 years old. Now he’s worried sick that the VA is going to take everything he has. We filed for his pension back in 2018 and he lost his wife a couple years after that. He can’t drive and requires the assistance of a live-in caregiver. When we submitted his VA pension application, we included all his expenses, caregiver logs, affidavits, and more. He was initially denied, but we appealed and he was granted the pension. All was well until he received this debt letter.
In the letter the VA mentions that if he can’t pay it all back, don’t worry. They’ll take installments. But they’re going to go ahead and assume that the debt is valid and reduce his pension from $2,200 a month to $237 a month. According to the VA, he’s basically guilty until proven innocent. The VA says the debt is valid until he proves otherwise.
Put yourself in the situation of this 90 year old Veteran. He served honorably and now the VA says that they’re sorry for the inconvenience. If he doesn’t act, they’ll refer his debt to the Department of Treasury and add an additional 30% to his debt. They just keep piling it on him. Now the burden is on my 90 year old client to prove that he doesn’t owe this debt.
What Are Your Options?
When you get a debt letter from the VA, they have graciously (sarcasm) given you five choices. None of these choices are ideal because of the stress and associated with the choice, but here are they are nonetheless.
Option one is to enter into a payment plan. In this case the VA takes your maximum pension of $2,200 a month and reduces it to $237 a month. They’ve already made that decision for him. Despite that fact that he is already on a fixed income and lost his wife, the VA still wants the money that they overpaid him.
Option two is to dispute the debt. In order to do this, you have to submit a financial status report telling the VA what you make and what you have. You have to outline your income, whether it be wages or Social Security, and what you have in the bank. You also have to explain the VA’s error providing supporting documentation. But how do you explain to the VA that they made an error when they were the ones that approved your application in the first place? Who knows.
Option three is to request a waiver because of hardship. You tell them that you can’t pay because of extenuating circumstances. In this Veterans case, he could say that this pension is all the income he gets. But the VA has already reduced his pension anyways, making things extremely tough for him. So they are forcing an installment payment on him before he can claim the hardship.
Option four is to compromise, much like you would a tax debt. You can offer a lump sum for what the VA says you owe them. But how are you going to pay them a lump sum if you’re living paycheck to paycheck? You don’t want to deplete your savings and emergency fund because you might need it one day. You can see the situation this creates for Veterans and it’s sad.
Option five is that you can appeal. This is an odd one to me. How do you appeal something that they approved in the first place? It’s not the fault of the Veteran that the pension amount was miscalculated by the VA. But since the VA has no accountability, the burden is now on the Veteran.
If you’re as angry as I am about this, I recommend contacting your Senators and Representatives and tell them what’s happening. Tell them how you feel and how this is impacting your life or the life of a Veteran you know. Hopefully if enough of us scream loud enough, they’ll realize this is not right.
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If you need assistance with VA debt letters or VA benefits in general, complete this form or give us a call at (229) 226-8183. If you’d like to see this blog in video format, you can watch it below. Please be sure to SUBSCRIBE to our YouTube channel and click the bell notification button so that you’re notified each time we publish a new video.