The Military Says You Owe Money? Here's What to Do.

An arrangement of office supplies on a bill stamped "past due"
(Adobe Stock)

What do you do when the Defense Finance and Accounting Service decides that you owe it money -- but you aren't even in the military anymore?

This situation happens more often than you might think. Every year, former service members get notices from DFAS that they have an outstanding debt. This can happen in many ways. It could be the Basic Allowance for Housing (BAH) that didn't change at the right time in a move, the cost of excess weight on a permanent change-of-station (PCS) move, an allowance that wasn't turned off at the right time or any number of other things.

Here's what you need to know.

Notification of a Debt to DFAS

DFAS says it will notify former service members "with a written explanation, description of your debt and a debt statement showing how the debt amount was calculated. It will list entitlements, deductions, payments, and the amount overpaid."

However, DFAS sends notifications to a former service member's last known mailing address, which may not be current. Veterans who aren't receiving any benefits from DFAS don't need to keep their addresses updated, so sometimes the first contact that a veteran gets about a debt is from a collection agency.

Repaying a Debt to DFAS

A veteran receiving military retirement pay may have choices, such as the option to pay their debt in full or have their military retirement pay reduced until the debt is repaid.

In the cases of veterans not receiving military retirement pay, DFAS will attempt to contact them to collect the debt. If the veteran does not respond, the debt will be referred to a collection agency. Once it is referred to the collection agency, the veteran must work with the collection agency for repayment.

DFAS Debt and Your Credit Report

If a veteran does not arrange debt payment within 62 days of the debt notification, the major credit reporting bureaus will be notified of a debt in collections. Once the debt is repaid, you may request that DFAS ask to have the debt removed from your credit file. This may take up to 90 days.

DFAS Debt and Other Federal Payments

If a DFAS debt remains unpaid, some or all of other federal payments may be taken for payment toward the debt. This includes federal income tax returns, Office of Personnel Management annuity payments, Social Security Administration payments and non-Department of Defense federal salaries.

If You Disagree with a Debt

If you've received notice of a debt and you disagree, you can request a "cursory review" of your debt. In some cases, you may request a hearing about your debt. You may also go back to the office that submitted the debt to DFAS to ask it to update the documentation it has submitted to DFAS.

How to Find Out More

DFAS devotes a whole section of its website to different kinds of debt and different situations. In addition, DFAS indicates that affected veterans may contact it by telephone or mail or go to the AskDFAS online tool to discuss their debt, repayment or waivers. There is also an online debt payment status tool, but it requires the use of a Common Access Card.

If you receive a notice that you have a debt to DFAS, take action immediately to find out how much you owe and why. Then make a plan to repay your debt. This is not a problem that is going to go away.

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