Revised May 6, 2024
VI.iii.2.C.1.aGeneral Information About the Rights Afforded an Indebted Beneficiary
A retroactive reduction of a beneficiary’s award usually results in the creation of an overpayment or debt in the beneficiary’s account.When this occurs, the Debt Management Center (DMC) notifies the indebted beneficiary of the right to
- informally dispute the existence or amount of the debt
- request waiver of collection of the debt, to include a hearing, and
- seek review of the Department of Veterans Affairs (VA) decision underlying the debt.
The table below describes the characteristics of each right afforded to the beneficiary.
| Rights of the beneficiary | Characteristics |
|---|---|
Informal dispute | A written statement from the beneficiary in which they question whether the debt is still outstanding and/or whether the amount is accurate. |
Waiver request | A written statement from the beneficiary explaining why they should not be responsible for payment of the debt, or why collection of the debt would be unfair and create a financial hardship. |
Decision review request | Completion of one of the following standardized forms for the underlying decision that resulted in the debt: |
Reference: For more information on the rights afforded an indebted VA beneficiary, see 38 CFR 1.911.
VI.iii.2.C.1.bReviewing Correspondence From Beneficiaries
Beneficiaries may send informal debt disputes, waiver requests, or decision review requests directly to the regional office (RO) for action.Carefully evaluate the verbiage beneficiaries use when they express disagreement with a debt, as they often take this action without explicitly stating their intent or providing the rationale for doing so.Informal debt disputes received by DMC will be routed to the RO for debt validation and should be processed as discussed in M21-1, Part VI, Subpart iii, 2.C.2.a.
VI.iii.2.C.1.cExamples: Properly Interpreting and Processing a Beneficiary’s Expression of Disagreement With a Debt
The table below contains
- examples of the proper interpretation of a beneficiary’s expression of disagreement with a debt, and
- instructions for processing the beneficiary’s statement.
| Scenario | Action |
|---|---|
The beneficiary asserts the debt is unjust and she should not have to repay it (particularly where a delay in claims processing resulted in creation of a larger debt than might have otherwise been incurred). |
|
The beneficiary asserts the debt was incorrectly calculated. |
|
The beneficiary asserts the debt was incorrectly calculated and notes that its repayment would create a financial hardship. |
|
The beneficiary asserts the underlying VA decision that created the debt was improper and wants VA to make a new decision. | Treat the beneficiary’s statement as a(n)
|
Note: A statement of disagreement with a debt may be construed as a request for a waiver of debt. There is no requirement that a beneficiary explicitly request a waiver in no uncertain terms.
References: For more information on
-
VA’s duty to sympathetically read correspondence from a beneficiary, see Edwards v. Peake , 22 Vet.App. 29 (2008)
-
legacy appeals, see M21-5, Chapter 7
-
higher-level reviews, see M21-5, Chapter 5
-
supplemental claims, see M21-1, Part II, Subpart iii, 2.B
-
determining whether a beneficiary’s statement constitutes a request for waiver of a debt, see
-
the Committee on Waivers and Compromises (COWC), see M21-1, Part VI, Subpart iii, 2.C.3.a.
2Actions to Take In Response to an Informal Debt Dispute
This topic describes the actions to take in response to an informal debt dispute, including
- processing a beneficiary’s informal debt dispute request, and
- additional informal debt dispute requests.
Revised May 6, 2024
VI.iii.2.C.2.aProcessing a Beneficiary’s Informal Debt Dispute Request
Informal debt disputes originating at DMC will be referred to the RO as a debt validation request.Follow the steps in the table below to control and respond to the inquiry from DMC.Omit the action described in Step 6 of the table below if the informal debt dispute originates at the RO.
| Step | Action |
|---|---|
| 1 | Establish control under end product (EP) 290 with the appropriate Debt Validation or PMC – Debt Validation claim label. References: For more information on
|
| 2 | Was the award adjustment that resulted in creation of the debt appropriate and properly executed?
|
| 3 | Did correction of the award eliminate the debt in its entirety?
|
| 4 |
|
| 5 | Notify the beneficiary that
Note : Do not provide decision review options when no change is warranted in the original decision. |
| 6 | Submit a Dispute Response ticket to DMC using the Light Electronic Action Framework (LEAF) system.Important: In support of the ticket prescribed above, provide the claimant’s file number or claim number and include the Veterans Account Management System (VAMS) case number included on the DMC debt dispute cover sheet, if of record, as well as the receipt date and document type of relevant documents in the Veterans Benefits Management System (VBMS). |
| 7 | Clear the EP 290. |
Note: When an informal debt dispute originates at the RO, use the document’s subject line to clearly identify the notification associated with Steps 4 and/or 5 in the electronic claims folder (eFolder) so that it can be referenced if DMC submits a debt inquiry to the RO.
VI.iii.2.C.2.bAdditional Informal Debt Dispute Requests
The right to informally dispute a debt is limited to one time per debt. Debtors continue to have the right to request a waiver of the debt or pursue a decision review option when VA adversely resolves the debt dispute request.Follow the steps in the table if an additional informal debt dispute request is received.
| Step | Action |
|---|---|
| 1 | Was an EP 290 established to control the informal debt dispute?
|
| 2 | Inform the claimant that
|
| 3 | Clear the EP 400. |
3Processing a Request for Waiver of a Debt
This topic contains information on processing a request for waiver of a debt, including
- description of the COWC
- processing a debt waiver request originating at the RO
- processing an award after VA grants a request for waiver of a debt, and
- example of a situation in which
- VA must withhold benefits from a retroactive award, and
- withholding benefits from a retroactive award is not in order.
Revised May 6, 2024
VI.iii.2.C.3.aDescription of the COWC
The COWC is a decision-making panel comprised of designated VA employees of the St. Paul and Milwaukee Pension Management Centers and DMC that is responsible for
- conducting hearings, and
- accepting or rejecting waiver requests or compromise offers.
Note: The COWC is not responsible for determining the validity of a debt. If a debtor raises this issue, the COWC refers it back through the LEAF system to DMC for proper routing as an informal dispute. References: For more information on the COWC, see
VI.iii.2.C.3.bProcessing a Debt Waiver Request Originating at the RO
When a debt waiver request originates at the RO, refer the waiver request, along with all related documentation, to DMC by submitting a Found Waiver ticket using the LEAF system.
VI.iii.2.C.3.cProcessing an Award After VA Grants a Request for Waiver of a Debt
If VA retroactively awards benefits over a range of dates that includes a time period over which VA previously created and later waived all or part of a debt, the claimant might not be entitled to the full amount of the lump-sum retroactive payment. Explanation: The retroactive payment of benefits for a time period over which VA had previously created and waived a debt would represent a duplicate payment of benefits if the basis for the adjustment that resulted in the debt and the basis for the subsequent retroactive award is the same. In such cases, claims processors must follow the instructions in the table below for withholding any benefits VA already paid a beneficiary. Notes:
- If the COWC has waived all or part of a debt, documentation of the waiver will exist in the beneficiary’s eFolder.
- For an example of a case in which
- VA must withhold benefits from a retroactive award because VA waived a prior debt, see M21-1, Part VI, Subpart iii, 2.C.3.d, and
- withholding benefits from a retroactive award because VA waived a prior debt is not in order because the basis for the adjustment that created the debt and the basis for the retroactive award are not the same, see M21-1, Part VI, Subpart iii, 2.C.3.e.
| Step | Action |
|---|---|
| 1 | Use the Enterprise Management of Payments Workload and Reporting for VA (eMPWR-VA) to determine the amount of the debt COWC waived for any time period that overlaps the time period the pending award will affect. |
| 2 | On the OTHER ADJUSTMENTS tab in the awards-processing system,
|
| 3 | Make any other necessary adjustments to the beneficiary’s award. |
| 4 | Follow the instructions in M21-1, Part VI, Subpart i, 1.B, for notifying the beneficiary of the actions taken. |
References: For more information on
- using eMPWR-VA, see the eMPWR-VA User Guide, and
- establishing withholdings in VBMS, see the VBMS-Awards Users Guide.
VI.iii.2.C.3.dExample: VA Must Withhold Benefits From a Retroactive Award
Situation :
- A Veteran received pension based on income of $2,400.00 for the period August 1, 2022, through July 31, 2023. (This income consisted of a monthly Social Security benefit of $200.00.)
- In February 2024, the Veteran reports that her Social Security income was actually $215.00 per month (or $2,580.00 per year) for the same period of time.
- VA adjusts the Veteran’s award to reflect the increased income, thereby creating an overpayment (debt) of $180.00.
- The Veteran subsequently requests a waiver of the debt.
- VA waives the entire amount of the debt.
- The Veteran later submits to VA a letter from the Social Security Administration (SSA) showing her correct gross monthly rate of Social Security income was $200.00 from August 1, 2022, through July 31, 2023.
Actions:
- The subsequent award adjustment reflecting the lower rate of Social Security income must include a withholding of $15.00 per month.
- The corresponding decision notice must inform the Veteran that the purpose of the withholding is to prevent duplicate payment of benefits following VA’s waiver of a prior debt.
Note: Had the Veteran, for example, submitted unreimbursed medical expenses for the period August 1, 2022, through July 31, 2023, instead of submitting the letter from SSA, a withholding would still be in order because the basis for the two award adjustments – countable income for VA purposes – remains the same.
VI.iii.2.C.3.eExample: Withholding Benefits From a Retroactive Award Is Not in Order
Situation:
- In September 2018, VA created a debt when it retroactively removed the Veteran’s son from the Veteran’s award effective July 1, 2016, because the Veteran failed to return VA Form 21-0538, Mandatory Verification of Dependents.
- The Veteran subsequently submitted, and VA granted, a request for a waiver of the entire debt.
- In February 2019, the authorization activity promulgated a rating decision that granted service connection for a knee disorder, rated 10-percent disabling, effective March 1, 2016.
Result: A withholding is not in order because the basis for the September 2018 award adjustment (entitlement to additional benefits for a child) is not the same as the basis for the February 2019 award adjustment (entitlement to disability compensation for a compensable service-connected disability).
4General Information on Disagreements With Debts
This topic contains information on disagreements with debt decisions, including, disagreements
- with a debt decision, and
- not submitted on a prescribed form.
Revised May 6, 2024
VI.iii.2.C.4.aDisagreements With a Debt Decision
Claimants can seek review of their VA benefits decisions through the decision review process by submitting one of the prescribed forms in M21-5, Chapter 4, Topic 2.c. Exception: Follow the guidance set forth in M21-1, Part X, Subpart ii, 5.A.2 when the beneficiary submits a statement requesting revision of a decision based on CUE. References: For more information on
- legacy appeals, see M21-5, Chapter 7
- higher-level reviews, see M21-5, Chapter 5, and
- supplemental claims, see M21-1, Part II, Subpart iii, 2.B.
VI.iii.2.C.4.bDisagreements Not Submitted on a Prescribed Form
Treat disagreements with a VA decision that resulted in a debt that are not submitted on the appropriate prescribed decision review form or as a valid statement of CUE as a request for application. Note:_ _When the claimant’s request is unclear, obtain clarification by telephone. References: For more information on
- requests for application, see M21-1, Part II, Subpart iii, 2.G.1.a
- obtaining information by telephone, see M21-1, Part III, Subpart i, 2.D.1.d and e, and
- properly interpreting and processing a beneficiary’s expression of disagreement with a debt, see M21-1, Part VI, Subpart iii, 2.C.1.c.
End of Part VI, Subpart iii, Chapter 2, Section C