Frequently Asked Questions

[GENERAL] Why will I hear from DFAS?/What is DFAS??? role?
As part of its payroll responsibilities, DFAS is generally required to collect all indebtedness (or debt) due to the United States and process waiver requests in accordance with applicable laws and regulations.

While there is no authority to approve a blanket (or group) waiver for all affected employees, the Office of the Under Secretary of Defense for Personnel and Readiness (P&R) has determined that it is in the best interests of the Department to support requests for debt waivers due to the unique circumstances involved with these debts, so long as the employee was not aware of the fact that he/she was not entitled to LQA and there is no evidence of misrepresentation, fraud or deception to acquire LQA in the first place.
[GENERAL] Why will I receive a letter from DFAS saying I owe money for my LQA?
Your military service or employing agency should have already notified you that you do not meet the eligibility requirements for LQA under the Department of State Standardized Regulations, Section 031.12b*, and were erroneously being paid a living quarters allowance (LQA). If you have additional questions related to your eligibility for LQA and why you have a debt, please contact your servicing HR office or Customer Service Representative (CSR).

*DoD Instruction 1400.25, Volume 1250, Enclosure 3, paragraph 2 applies to the ineligibility of some employees who are entitled to additional LQA payments based upon the authorization provided by the May 15, 2013 OSD Personnel and Readiness memorandum.
[GENERAL] What is the amount of my debt?
DFAS is in the process of reviewing the pay accounts of all employees who received erroneous LQA payments to determine each employee's total indebtedness.  The amount of your debt will be disclosed in your debt letter.  The distribution of letters has already begun and is expected to continue through early fall. 
[GENERAL] How does the process change if an employee resigns from federal service? Will this be reported to a debt collection agency to collect? Is the debt forgotten?

If you separate from federal service while making payments through bi-weekly payroll deductions, you can continue to make payments. If payments stop, the payroll office will send the debt to DFAS’ Debt and Claims office to pursue collection.  Interest will also be charged once this transfer to Debt and Claims occurs.

If you have requested a debt waiver and are awaiting a decision when you separate, the pay system will collect your final paycheck and apply it to the debt.  Further collection will be delayed on the remaining debt amount until you receive a decision on your waiver request.

If some or all of the debt is not waived, the debt will be transferred to DFAS’ Debt and Claims office to pursue collection. If you do not begin making payments on the portion of the debt that was not waived, your debt may be transferred to a private collection agency.  This will occur after 30 days if you are in the continental United States (CONUS) or 45 days if you are outside the continental United States (OCONUS).

[DEBT NOTIFICATION] When will I receive a letter from the DFAS saying I owe money for my LQA debt?

DFAS is currently coordinating with your servicing Human Resources Office on the distribution of debt letters.  Distribution of letters has already begun and is expected to continue through early fall.  The distribution of your debt letter may be slightly delayed if you have received LQA for more than 10 years.

[DEBT NOTIFICATION] How will I receive this notice?
You will receive an official debt notification letter (due process) from DFAS, which will be hand-delivered by your servicing Human Resource office in the near future. The letter will include specific details on how much you owe and your options available moving forward, including filing a waiver application or requesting a hearing.
[DEBT NOTIFICATION] My debt letter says that I owe less than I expected because DFAS wasn't able to locate all of my pay records. Does this mean that I don't have to pay back the LQA I received for the time for which DFAS couldn't find my pay records?
Due to the extensive search that was already conducted, it is very unlikely that the missing records can be found or still exist.  The lack of these records will prevent the Government from pursuing the portion of the debt for which no documentation can be found.
[DEBT NOTIFICATION] What happens if the missing pay records are found in the future? Will I have to pay back that part of the debt then?
The likelihood that the missing records will be located is very small. In fact, it is likely that the records no longer exist. DFAS has made a thorough and exhaustive search for the records and does not plan to pursue additional searches.
[WAIVER REQUEST] Can I submit my debt waiver before I get my debt letter?
No, you will need to know the total amount of your debt to complete your debt waiver application.  However, you can begin putting together your debt waiver request prior to receiving your debt letter.  If you haven't already, you may wish to visit the customized Debt Waiver Guide that will help you prepare your waiver request.
[WAIVER REQUEST] How long do I have to file a debt waiver?
You have 3 years from the date you were initially notified by your employer about receiving erroneous LQA payments to request a debt waiver.  However, employees are strongly encouraged to submit waiver requests as soon as possible, as DFAS is currently making extra efforts to expedite the processing of employees’ waiver requests.  DFAS will also be advising the military service or defense agency of the status of waiver submissions.
[WAIVER REQUEST] What happens to my debt if I don???t submit a waiver request right away?
Since the debt is being delayed until further notice, you will not have to start making payments at this time.  The debt is being delayed to give you time to gather your documents and make decisions.  However, it is important to submit your waiver request as quickly as possible, since DFAS will be expediting the processing of requests received for 6 months.  If no waiver has been submitted after this time, DFAS will advise the appropriate Human Resources Office.
[WAIVER REQUEST] What if I don???t request a debt waiver within three years?
The law requires that requests for waivers be submitted within 3 years.
[WAIVER REQUEST] Where do I submit my request for a debt waiver?
You will submit your debt waiver package to DFAS either by mail or fax to:
ATTN: Dept. 6200
8899 E. 56th St.
Indianapolis, IN 46249

Or, fax to 866-401-5849 or DSN 510-366-0354.

DFAS will compile and review your waiver package to ensure it is complete.  If DFAS recommends approval, the waiver package will be forwarded to the Defense Office of Hearings and Appeals (DOHA) for a final decision on your waiver request.
[WAIVER REQUEST] How will I be notified of the status of my waiver request?

Once the DFAS payroll office has compiled your waiver package, you will receive notification via mail that your waiver request has been sent to the DFAS Waivers and Remissions team. The Waivers and Remissions team will ensure your request is complete and will send recommendations for approval to the Defense Office of Hearings and Appeals (DOHA) for a final decision. You can check on the status by calling DSN: 312-699-0580 or 800-729-3277.

[WAIVER REQUEST] What if my waiver request is not complete?

If your request is not complete, DFAS will reach out to you via mail or email and request the missing information.   Please ensure your most current email address is indicated on the Wavier/Remission of Indebtedness Application, DD Form 2789.

[WAIVER REQUEST] How long will it take for my debt waiver to be reviewed/approved?
Depending on the length of the debt period, it may take up to 30 days for DFAS to process your waiver request, before sending to DOHA for a final decision. DOHA will be expediting its handling of these waiver requests and it is optimistic that the processing time could be significantly shorter than five months.
[WAIVER REQUEST] How will I find out if my waiver has been approved or not?

If your debt is waived in full, DOHA will notify DFAS. DFAS will then send you notification via mail and will make the necessary adjustments to your pay account (i.e., DFAS will make sure the debt is properly noted in your account, so that collections do not begin).

If your debt is partially waived or denied, DOHA will notify you directly via mail. DOHA will also notify DFAS. If you owe money, DFAS will apply any waived amounts against the debt and start collection of the remaining portion of the debt. You may request a voluntary repayment agreement with approval of your agency. You will have appeal rights that will be detailed in the response from DOHA. 

[WAIVER REQUEST] If a waiver for indebtedness is denied, what is the annual interest rate that will be charged on the outstanding debt when the debt is not paid in full? Is that rate fixed or variable?
Interest and penalties are not charged to current employees.
[DEBT REPAYMENT] When will I have to start repaying my debt?
Given the unique circumstances surrounding your debt, if you apply for a waiver of your debt, DFAS will delay collection action while you are waiting for a decision on your waiver request.  However, please note that if you have an existing LQA debt related to a prior reconciliation, collection of that debt will not be delayed.
[DEBT REPAYMENT] What are my options for repaying the debt, and can I do so even if my debt collection is delayed?
DFAS will include information on repayment options and how to apply for a debt waiver in your debt letter. Yes, you may submit a voluntary repayment agreement to set up a payment plan which needs to include your military service or defense agency’s approval. Details regarding voluntary repayment agreements will be included in your debt letter.
[DEBT REPAYMENT] What is the difference between a repayment and the garnishment of wages?
A repayment is a voluntary payment and a garnishment is an involuntary payment.
[DEBT REPAYMENT] Will an employee???s wages be garnished to pay back the debt?
If you choose to submit a voluntary repayment plan, even though collection is being delayed, the payments will be made through biweekly payroll deductions.  If your debt is not waived and/or repaid and you do not initiate repayment, your pay could be garnished, or involuntarily withheld, for payment of the debt.
[DEBT REPAYMENT] How long do I have to pay back the debt if a waiver is not granted? I understand that repayment should happen within 3 years.
Yes, 3 years is the recommended payback period, per the DoD Financial Management Regulation (FMR). According to the FMR, installment payments should be reasonable, when comparing the size of the debt and your ability to pay.  If a proposed repayment agreement is not acceptable, you will have 30 days from the date of the written notification to request a hearing or a special review.

If you choose to submit a voluntary repayment plan for this erroneous LQA debt, even though collection is being delayed, your employing agency’s approval will be required on the repayment form.
[DEBT REPAYMENT] Will the penalty assessment be waived if the debt is not paid in 30 days if I am in the continental United States (CONUS) or 45 days if I am outside the continental United States (OCONUS)?
Interest and penalties are not charged to current employees.
[DEBT REPAYMENT] Will my military retirement pay be garnished?
Military retirement pay will not be garnished while you are awaiting a decision on your waiver request and while you are a DoD employee.   If any portion of your debt is not waived and/or repaid at the time you separate and you do not initiate repayment, your retirement pay could be garnished.
[DISPUTING A DEBT] Can I dispute the validity of this debt at the same time I file a waiver?
No. While the Department has deemed the LQA payments erroneous, you may disagree with this decision. To contest the validity or amount of the debt, the individual must petition for a hearing; more details are provided in the notice of indebtedness you will soon receive. Do NOT include arguments concerning the validity or amount of the debt in your waiver application, as the waiver may be denied on this basis.
[LQA PAY STATUS] Will my LQA stop immediately?
Your HR Office makes this determination and will tell DFAS how to pay you going forward.

The Office of the Under Secretary of Defense for Personnel and Readiness (P&R) issued memoranda dated January 3 and May 15, 2013, which authorize the impacted employees to receive additional LQA for up to one year, except in cases of potential fraud, due to the unusual circumstances. The LQA paid during this one-year period will not be included in the debt amount.

For more details on this, please contact your HR Office.
[LQA PAY STATUS] I was notified on May 1, 2013, that I was erroneously paid LQA when I wasn???t eligible for it, but the memorandum I received said I was granted LQA for up to one year. Will I receive LQA?
In the pay period in which you were notified about the erroneous LQA payments, the erroneous payments should have been stopped at the beginning of the pay period. This stoppage prevents you from receiving erroneous payments with knowledge that you are not entitled to the payments and avoids the need to establish a debt for repayment. If you do receive erroneous payments after you were notified, the funds should be set aside for repayment to the government.

The start date of your additional LQA payments depends upon whether your entitlement to the additional payments is based on upon the first or the second authorization given by OSD Personnel and Readiness (P&R).  Please see the January 3, 2013 and May 15, 2013 P&R memoranda to determine which authorization is applicable to you. These memoranda explain when the additional LQA payments should start.
[AFFECT ON CREDIT/PAY/TAX] Will/how will this debt affect my credit?
DFAS will not report your debt to the credit agency unless you are required to start making payments and fail to do so.
[AFFECT ON CREDIT/PAY/TAX] We know that debt in default is reported to credit agencies. Is debt that is not in default reported or disclosed to credit agencies?
Delinquent debt is reported to the credit agencies; non-delinquent debt is not reported.
[AFFECT ON CREDIT/PAY/TAX] Will this affect any of my other entitlements or pay?
Impacts on other entitlements, such as Renewal Agreement Travel, Home Leave, Temporary Quarters Subsistence Allowance and Student Travel, will be handled separately and are currently under review. If you have questions, contact your servicing HR Office.
[AFFECT ON CREDIT/PAY/TAX] If collection of the erroneous LQA payments is waived, are there any income tax consequences?
No. If a waiver request is approved, there are no income tax consequences because the law (5 U.S.C. 5584(e)) specifically states that the erroneous payments that are waived are considered to be valid payments for all purposes.