A VA overpayment occurs when a veteran receives more than his or her designated disability benefit or other VA benefit amount from the VA and thus, must pay that extra money back to VA. An overpayment is a debt the VA creates when it determines a veteran has been paid more than they were entitled in benefits. The veteran is then issued an overpayment notice and asked to return that extra amount of money to the VA.
The VA will collect this debt by withholding current or future disability payments made to the veteran. A veteran typically has 30 days from the date the VA notifies them of the overpayment before the debt is recouped, or recovered, from the veteran.
What Are Common Causes of an Overpayment?
As mentioned, the VA creates an overpayment when it discovers a veteran or claimant has been paid more than they were entitled. A few common causes of VA overpayments are:
- Changes in dependency status, i.e. when a veteran fails to report their divorce to the VA and continues to receive dependency benefits for their spouse.
- VA pension recipients fail to report income.
- Changes in enrollment in educational programs.
- Failure to report a period of incarceration to VA.
- Sometimes VA just mistakenly believes an overpayment has occurred
What Can I Do to Fight a VA Overpayment?
When the VA creates an overpayment, they will notify the veteran with the total overpayment amount, and request that the overpayment be repaid. However, if the veteran believes this overpayment was created by mistake, or is unable to repay the overpayment, they can take certain actions in response. A veteran can:
- Dispute the existence and/or amount of the debt.
- Request a waiver of collection (and a hearing for the waiver).
Disputing the Existence and/or Amount of the Debt
If a veteran wishes to dispute the amount or the existence of the debt, the VA will review the accuracy of the debt determination. If the VA decides that the debt is correct, the veteran can still request an overpayment waiver. A veteran can dispute the amount or existence of the debt at any time, but a dispute must be done within 30 days of the notice in order to delay the collection of the debt.
Requesting an Overpayment Waiver
A veteran can request a waiver for the VA overpayment within 180 days from the date of the overpayment notice. If the waiver is requested within 30 days of the notice, collection of the debt should be stayed until the request is resolved. Veterans should include a financial status report to show how the recoupment of the debt would cause them financial hardship.
However, the VA cannot waive the overpayment if there is fraud, misrepresentation, or bad faith on the part of the debtor.
Additionally, if the veteran believes that the overpayment was created through the fault of the VA, they can argue that the overpayment be waived. If it is found that the debt was created based solely on VA administrative error or error in judgement, the veteran may be able to keep the excess payments.
What If the Debt Is Legitimate?
If the VA proves that the debt is valid, veterans can set up a payment plan with the VA’s Debt Management Center (DMC). The DMC manages all overpayments and will be responsible for recouping the VA overpayment from the veteran.