Will You Have to Repay a Military Bonus, Too?


What if the government asked for you to return that long-ago spent reenlistment bonus your family scored?

Some members of the California National Guard have been asked to repay reenlistment and other bonuses years after receiving them after investigators found that they were improperly given out by military recruiting officials. Officials have acknowledged that it was not the military member's fault that he or she received the bad bonus. But, nonetheless, those troops were ordered to repay.

The first thing many military families thought when they saw this story was "if it happened to them, could it happen to me?" It's easy to put yourself in the shoes of these California Guard members. Many, many military members and veterans have owed the government money at some point after an over-payment caused by a paperwork problem or when they were found responsible for losing some piece of equipment that was arguably not actually their fault. It is not an uncommon story.

But the Defense Department isn't saying right now whether or not military members beyond those caught up in this investigation should fear a repayment order. When I asked them, they declined to comment.

But they did say that if you are ever asked for a bonus repayment, you should ask for a review.

"There is a formal review process in place through which affected service members can be relieved of responsibility to repay improperly awarded bonuses," said Army Maj. Jamie Davis, a DoD spokesman.

Small comfort.

The financial realities are that if you are hit with a repayment order for a bonus or anything else, and a review doesn't end in your favor, you could be facing a big bill. So what if you have to pay?

For financial advice we looked to our friend Scott Halliwell, a certified financial planner with The USAA Educational Foundation which helps troops with financial literacy. He said that although it's probably unreasonable to expect anyone to have $20,000 laying around just in case the government demands, his best advice is also the financial advice most often ignored: have an emergency fund.

"I think the closest you could come is the age-old financial advice we give people, and that is you need to have an emergency fund," he said. "If you have an emergency fund, and that's certainly an emergency, that would get you part of the way with repayment."

Even then, he said, you may not have enough on hand to pay.

"You're either going to have to find another source of income to come up with the money, or you're going to have to reduce your expenses -- or you'll have to make a combination of the two," he said.

What financial advice would you give someone who is facing a repayment order? Leave your thoughts in the comments.

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