Government's Action To Set Off

B-195006: Sep 22, 1980

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A Navy member filed a voluntary petition in bankruptcy in which he listed the Government as a creditor. Prior to the date the petition was filed, the United States was indebted to the member for accrued leave rations. Before the petition was filed, the Government deducted the amount owed for leave rations from an outstanding debt the member owed the Government. The issue is whether the United States is indebted to the Navy member for leave rations which accrued prior to the date the member filed the petition. The filing of a voluntary petition in bankruptcy did not affect the Government's setoff of the amount due the member for leave rations. The accrual of the entitlement to the leave rations, the debt they were set off against, and the setoff action all took place before the petition was filed. The setoff effectively constituted payment of the amount due the member by reducing his debt. Accordingly, payment may not be made on the member's claim.