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More: Out-Of-Service Debt
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Out-Of-Service Debt
 Out of Service Debt Privacy Act Statement
 Frequently Asked Questions (FAQ)
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 Collection Fees FAQ
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Military Pay FAQ
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Out-of-Service Debt
Military Pay
Frequently Asked Questions

  1. You transferred a debt for collection from my Active/Reserve Pay. I can't afford the amount being deducted from my pay. What are my options?
  2. I’m paying your office and now the debt is being collected from my Active Duty pay. Why are both offices collecting the same debt?
  3. I just separated from the service. Why does my last Leave and Earnings Statement show I have a debt?
  4. My initial debt letter and DFAS-DE Form 0-641 indicates I'm in debt for an allotment issued after my separation. I didn't receive the allotment, so why am I in debt?
  5. I was incarcerated when pay continued to be released to my bank after separation. I wasn't aware this happened until you notified me of a debt. I contacted the bank that was receiving my direct deposit and was advised the funds were withdrawn by my ex-spouse, so why don't you bill them?
  6. Why was the debt added to my wages?
  7. What can I do if I've received my VA award letter and I need my withheld taxes refunded?
1. You transferred a debt for collection from my Active/Reserve Pay. I can't afford the amount being deducted from my pay. What are my options?

Answer:   Your current finance office can provide guidance regarding this issue; however, based on the DoD Financial Management Regulation, if a lump-sum repayment would create a financial hardship for the member, installment payments will be accepted. Although we referred the debt for collection from your pay, the finance office is the final authority regarding the collection rate.
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2. I'm paying your office and now the debt is being collected from my Active Duty pay. Why are both offices collecting the same debt?

Answer:   If you believe debt collection is being duplicated, contact both our office and your current finance office. Your finance office will provide you with an explanation of their debt. If it is the same debt, together we will determine the required action for resolution.
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3. I just separated from the service. Why does my last Leave and Earnings Statement show I have a debt?

Answer:   You will become aware of the debt approximately 2 months before the debt is programmatically transferred to us. Audits are performed on pay records from all branches of service, so it's typically 120 days or more before the debt validation is completed. Collection action will not begin until you receive a debt notification letter. It will not be necessary for you to contact us unless you receive a debt letter.
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4. My initial debt letter and DFAS-DE Form 0-641 indicates I'm in debt for an allotment issued after my separation. I didn't receive the allotment, so why am I in debt?

Answer:   You indirectly received benefit of pay not earned. The recipient (Insurance company, bank, etc.) of the allotment received the funds. The allotment was released to the designated individual or agency as if you made a payment. You may wish to contact the allotment designee for a possible refund.
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5. I was incarcerated when pay continued to be released to my bank after separation. I wasn't aware this happened until you notified me of a debt. I contacted the bank that was receiving my direct deposit and was advised the funds were withdrawn by my ex-spouse, so why don't you bill them?

Answer:   The overpayment was paid to you by means of the direct deposit account you elected. Repayment is expected from you. Although we are not legal experts, recovering the funds from your ex-spouse is a separate issue, and possibly a civil matter. You may wish to consult an attorney.
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6. Why was the debt added to my wages?

Answer:   Under Internal Revenue Service directives, if a member receives an overpayment of a taxable item, the overpayment should be reported under wages in the year it was paid. Note that as the debt is repaid, we will issue a tax certificate each January for the principal amount repaid in the prior year. Questions regarding use of the tax certificate should be directed to your tax representative or the Internal Revenue Service.
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7. What can I do if I've received my VA award letter and I need my withheld taxes refunded?

Answer:   If you received your funds in the current tax year, you may send our office a copy of your VA award letter and we will have the taxes refunded to you. In order to process your refund, we must receive the award letter by December 31. If you received your funds in prior tax years, you must file an amended income tax return with the Internal Revenue Service, IRS Form 1040X , and they will refund your taxes. We will issue a corrected TD Form W-2 reflecting a corrected FITW wage upon request.
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