Veterans who owe money to the Department of Veterans Affairs will have a better chance to avoid having their debt reported to consumer reporting agencies (CRAs). VA has amended its procedures for reporting these debts until all available efforts to collect them have been exhausted and they are classified as not collectible. Also, catastrophically disabled and low-income veterans’ debts will not be reported to CRAs at all, with the understanding that these veterans are entitled to free VA care.
Previously, VA reported some 530,000 debts per year to consumer reporting agencies. This resulted in roughly 60,000 delinquent debts being referred to credit-reporting agencies.
The change is particularly significant in light of VA’s decision to resume debt collections as of last Oct. 1.
“Reporting debt to consumer reporting agencies impacts credit worthiness and negative reports may cause financial distress vor veterans,” said VA Secretary Denis McDonough. “Late remittance or nonpayment can lead to debt collection. However, overpayment of benefits funds is often debt accrued through no fault of the veteran.”
In the meantime, VA will continue with existing debt-relief options – to include waivers, repayment plans and temporary hardship suspensions – for veterans who experience financial distress.