What is "out of service debt"?

It's a debt that you incur and are out of service. Notice the debt date is your ETS. DFAS conducts an audit of your complete payroll when you separate. If there is a debt owed, money you were paid that you weren't entitled, or money you were entitled that lacks sufficient documentation, you receive a debt for it. The debt will be owed to the US treasury and your federal tax returns will be held to pay for it.

You should have been informed at ETS during your out processing that you incurred that debt and why. A debt that large was probably recoupment for a bonus, or BAH overpayment, or failure to file a final travel voucher after receiving an advance for travel to home of record. But if the Finance office didn't inform you at separation, then you'll want to contact the finance office of the post you separated from.

According to the text on the letter they are saying you were paid for service after your ETS date and they want that money back.

When I googled this....what I found was apparently DFAS had suspended debt collections due to COVID and are now ramping the collections process back up. Best advice is to keep contacting DFAS until you get a hold of someone to confirm