If I were to leave the Army without having completely repaid the debt for a miscalculated REFRAD, what consequences would I face?

2023-12-19T18:04:59-05:00

Evening, all...

Trying to get a feel for what to expect for the future. Here's a short version of my situation for context:

I returned from a mobilization a few months ago and, when I checked my LES at drill, I was shocked to find that a 5- figure debt had appeared out of nowhere. Naturally, this raised a lot of alarm bells, as there was nothing I could have done between the end of my mobilization and the time I checked it that could have caused such a large debt to show up; apparently, this happened to a lot of guys in my unit, but I had the dubious honor of having the largest by a wide margin. My unit's ARA began looking into the matter with my command and it seems that my REFRAD date was miscalculated, resulting in a debt. If what I've heard about situations like this is true and my debt really is as big as it seems, I could be looking at a very drawn- out debt repayment with no option to pay in a lump sum (apparently an Army policy so we can't claim the Army left us unable to pay our bills). The timing of this couldn't have been worse, as my service obligation is supposed to end very soon. I'm really not on board with having to stay in longer just because someone else made a mistake, but I also don't want to find myself getting a black mark on my record.

With the context out of the way, here's my actual question: If I were to leave the Army without having completely repaid the debt, what consequences (i.e. extra fees, penalties, etc.) would I face?

Response by CPT Aaron Kletzing made Dec 20 at 2023 1:18 AM

2023-12-20T01:18:24-05:00

im willing to bet that the great COL Randall C. may have some good feedback on this one. best of luck to you!

Response by MSG Private RallyPoint Member made Dec 20 at 2023 6:52 AM

2023-12-20T06:52:30-05:00

The shortest answer is that if you ETS before the debt is paid, that debt will still be collected from any civilian pay you receive. It could be in the form of some garnishment from civilian pay, garnishment from your income tax returns. One way or another, the Government will get that debt.

That said, if your debt is because your REFRAD date got screwed up, I would HIGHLY recommend you work with your RA, your unit Command (and higher) to get this fixed.

When did you get to DEMOB site? When did you Final Out? Depart DEMOB? Start Post Deployment Leave (f you took any)?

Response by COL Randall C. made Dec 20 at 2023 8:24 AM

2023-12-20T08:24:13-05:00

To your last question, if you seperate from the service before paying back a debt there will be much more than "a black mark on your record". DFAS has a department (the Out of Service Debt department) that handles cases when service members separate and there is an outstanding debt. The federal government will claw back the debt in one form or another (well, if you decide to live the rest of your life off the grid, maybe not), either through an offset of federal payments, collection agencies, property liens, etc.

The next four paragraphs are there to tell you why trying to ignore the problem (i.e., seperate without addressing it) will not make it go away and is an incredibly bad idea. If you have that impression now, you can just skip them and go to the one marked with a #.

What you could expect is that you'll get a debt notification letter and reminder from DFAS within the first two months. After they failed to collect the debt, in addition to administrative & interest charges that will start accruing at the current treasury rate (4.875% through the end of December 2023) there are a number of other actions DFAS does.

After the two months (technically, "62 days after the first collection notice is sent") they report it as a collection account to the major credit bureaus (Equifax, Experian, Trans Union, and Innovis), have the collection agencies that are contracted with the federal government start trying to collect the debt, and pass it off to the Department of Treasury (they have a special program call the Treasury Offset Program (TOP) for debts owed to the government).

TOP will garnish any payment you get from the federal government to cover your outstanding debt. If the debt isn't discharged (repayment, elimination by the government, legal action, etc.), then failing some catastrophic event that wipes out any trace of it, it will exist as long as you do and (unless specifically exempted from offset) every tax refund, stimulus check, social security payment, state payment (they all have reciprocal agreements with the federal government), etc. will be offset to repay the debt.

Ok, does that have your attention now? Unless you're someone that doesn't care about your credit rating and plans on living between the cracks of society, then you should absolutely address the issue head-on.

# While there are many things I would leave in the hands of others if I have "a warm fuzzy" that they are doing their best to address the situation, pay issues are generally one of the exceptions I have.

How long has your unit been working on addressing this debt issue? If they've been working on it "for a few months", have you been actively involved during that time frame? If this is something that happened to "a lot of guys" in your unit, then it should be the top priority of your unit administrator in getting it addressed.

Even if you feel that they are giving it as much attention as it deserves, I would contact DFAS customer service* to ask what activity they see on your account, to hear their read on the debt to your account, and get a better understanding of what's going on. You can inform them of what's happened on your end (the unit should be ... I was told this ... I'm going to be separating on ... ), your status and how to make sure it is addressed if you transition.
----------------------------------------------------------------
* Contact DFAS - Call customer service at [login to see] or you submit a ticket though AskDFAS (the following is a direct link to submitting a ticket for your military pay & allowances (MPA) - https://corpweb1.dfas.mil/askDFAS/ticketInput.action?subCategoryID=91&pgModId=4&currentUser.currentRequestNonce=bc43a563-eb11-43f0-bda9-7afeb2a5e9ba

askDFAS - A DFAS Customer Service Tool

Response by CPT Private RallyPoint Member made Dec 21 at 2023 7:34 AM

2023-12-21T07:34:32-05:00

21Dec23: An update came from the pay team. I'll have to add a quote later, but basically all it said was that I was paid until mid October even though my official release date was early september and that the debt has temporarily been suspended but will resume collection in January (no collection or collection notice has been given thus far). The amount is still grossly disproportionate for the time frame mentioned, though.

Response by CPT Private RallyPoint Member made Jan 2 at 2024 10:45 AM

2024-01-02T10:45:55-05:00

Update #2 (2Jan24):

I contacted DFAS last week regarding my debt and the only response they could provide was that it was a pay/ entitlement debt placed by my unit (presumably the higher command and not the BN itself) and that because of this, they could provide no further information. I spoke with my UA about this and showed him the response. I also emphasized again that the amount of the debt (almost 12K) was way out of proportion with the time period cited by the pay team (mid- September to about the thrid week of October). Below is the entirety of the response from DFAS:

"They are basic pay an allowance debts put on by your unit. DFAS can see them but did not originate them as they come from the unit. For reasoning behind them, you will need to speak with your unit administrator."

The short version is that more inquiries will need to be made with my command's G-8. The longer answer, however, is that he also concurred that the amount of the debt was grossly disproportionate with the timeframe cited by the pay team. Additionally, after looking over the message from the DFAS rep, he remarked that this might be a sign that this was a screwup by my higher command since the DFAS team can't see anything from their end.

While I do not know the extent of the other Soldiers' debt issues, the number of Soldiers affected by this spontaneously generated debt is apparently enough (for the size of the unit that went on the deployment) that one proposal being put forward is to have the debts of everyone who went on the deployment wiped. As naive as I am regarding Army finance, even I will admit this seems a little too optimistic. However, to end things on a more positive note, our BDE commander has made it clear that we have his support on the issue and that he is leveraging what power he can to get to the bottom of this issue.

Response by CSM Darieus ZaGara made Jan 3 at 2024 8:16 AM

2024-01-03T08:16:57-05:00

You are playing with fire, the military is a huge beast with resources that no one can match. You can't run, you can't hide, and if you don't face it having a family would be challenging. It would creep like the blob (sorry for the aged ref.). Work with your command pay your debt.

Col. Cudworth said it all.