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VA Debt Management

As of October 2021, the VA has started sending out debt collection letters again. The VA paused the letters last year due to COVID 19. However, they have started sending them out again as of October 1.  Today we will look at how Veterans accrue debt with the VA. We will also see some options for settling that debt.

The VA Debt Management Center (DMC) provides accounts receivable services to the Veterans Benefit Administration, the Veterans Health Administration, and the National Cemetery Administration. Any debt owed to these three branches of the VA will be funneled through the DMC for collection purposes.

One important thing should be mentioned. The DMC will not resume referring debts to the Credit Reporting Agencies until July 2022.


Compensation / Pension Debt

Veterans can establish debt to the VA through a variety of ways. If they are receiving disability compensation and are in the National Guard or Reserves, they must pay attention to active-duty time or drill pay days so as not to be overpaid. In addition, the VA must be notified about any change of dependency, especially in cases of divorce or death of a spouse, or a dependent child aging past 18 years if they are not attending college.

Other circumstances affecting compensation include payment after the beneficiary dies, in which case the surviving family would owe a debt to the VA.  Incarcerated Veterans are ineligible to receive compensation benefits. They will be responsible for debts from overpayment by the VA while incarcerated or fugitive felons.

Veterans who are receiving a pension must notify the VA if there is a change in income or net worth. Included within this would be the need to notify the VA if there is a change in living arrangements (ie. Veteran changes assisted living facilities or moves in with children). Any of these situations may very well cause a change in financial status which can affect the amount of pension the Veteran or Surviving Spouse will receive.  Veterans must notify the VA in these instances. Otherwise, they may accrue a debt which will have to be repaid.


Education debts can be established by Veterans or dependents. Anyone using a VA sponsored means of paying for education, whether it is the GI Bill, Chapter 35 benefits, or other benefits, is responsible for how that money is used. If a student withdraws from class or fails to attend the class, they may end up owing a debt to the VA. In addition, classes taken with education benefits must count toward graduation. If they do not, the VA will usually seek to recoup the money that was paid for that class. As always, any change in Active Duty status must be reported as it will impact education benefits as well.


If a Veteran fails to obtain the release of Home Loan Liability, they will owe a debt to the VA for the amount of the loan for which the VA was guarantor.

And finally, if a Veterans receives duplicate or erroneous payment from the VA, that money is owed back. The VA General Information number is 1-800-827-1000 and representatives can let Veterans know where the money originated from and if it is theirs to keep.

Resolving VA Debt

The DMC will not begin offsetting Veteran Benefits until January 2022. If a Veteran receives a debt letter from the VA, it is best to contact the VA and work with the DMC to figure out another option if possible. The phone number for the VA DMC is 800-827-0648. Options for debt resolution include the following:

Extended Repayment Plans

Beneficiaries can make monthly payments in two ways. The first way is by monthly offsets as mentioned above. The VA will keep part or all of a Veteran’s benefit payment each month in order to pay down the debt.

The other monthly payment plan involves the Veteran calling the VA DMC and establishing a monthly payment plan to take care of their debt. If the play repays the balance within 5 years (60 months), there is no need to file a Financial Status Report. A Financial Status Report is not necessary for repayment plans under five years.

Debt Waiver

A waiver depends on financial hardship. If paying even smaller amounts each month will cause a Veteran (or dependent) to experience financial hardship, they can request the VA to waive (forgive) either part or all of the debt. If the VA accepts the waiver, that amount will not have to be repayed.

Compromise Offer

There are times when a Veteran or dependent may establish a debt and not have monthly benefit payments from the VA (medical co-pay payments, etc). If they cannot make monthly payments, the beneficiary can offer an amount lesser than the entire amount as a one-time lump sum full payment. If the VA agrees to the compromise, the beneficiary has 30 days to make the payment.

Temporary Hardship Suspension (until September 30, 2022)

A beneficiary who is experiencing financial hardship can request a temporary suspension of payment until. September 30, 2022. A suspension would hopefully provide time for the beneficiary to figure out a way to make the payments on the debt. However, a suspension is based on the VA DMC agreeing to it.

Debt Collection Information

There are a few key points of information for Veterans.

First, the VA will not begin to offset benefit payments until 90 days after they receive a due process letter. This gives the Veteran time to call and make other arrangements with the VA DMC if they choose to.

Second, the DMC will automatically put in place a 36-month repayment plan for Compensation and Pension debts. If the Veteran wants a longer repayment plan, they will need to contact the DMC as stated above. Remember, Veterans do not need a Financial Status Report for payments of five years or less.

Portal for Debt Management

Along with the new VA webpage, the VA has a new online portal for VA Debt Management. The address is https://www.va.gov/manage-va-debt/. As with any other VA page, Veterans need a DS Logon, MyHealtheVet, or ID.me login to access it. Veterans can log in to their VA account and view debt balances and any DMC letters. This portal gives Veterans the option to pay their VA Debt online. The VA Debt Management Center has their phone number on the page or see it below. Beneficiaries can call the DMC if they have a question, need to seek financial help with a waiver or compromise, or if they want to dispute a debt.

Most Important – Contact DMC

Here is the most important advice. Do not simply set the letter aside and forget about the debt. Even if a beneficiary is unable to pay the debt, they should immediately contact the DMC to discuss their options. The VA is willing to work with Veterans, especially if there is a financial hardship. The worst thing a Veteran or other beneficiary can do is simply not pay AND not contact the VA. In that case, any benefits due the Veteran / dependent will be offset to the full in order to pay the debt. In addition, the account may be reported to Credit Reporting agencies, negatively affecting the Veteran’s credit score.

DMC Contact


U.S. Department of Veterans Affairs
Debt Management Center
PO Box 11930
St. Paul, MN 55111

Bottom line is for the Veteran to contact the VA Debt Management Center and see how they can work with them.

And that is the information on the VA Debt Management Center beginning collection actions. If you have any questions or believe you may owe the VA a debt, log on to the DMC portal through the link above to check if you have a debt and, if so, how much. Then call the DMC and make arrangements to take care of the debt.

As always, if you have any questions feel free to email us at info@nwavet.org or drop a comment below.

God Bless,


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