Legislation Plus Aggressive Action Needed To Strengthen VA's Debt Collection

HRD-81-5: Published: Feb 13, 1981. Publicly Released: Feb 23, 1981.

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GAO was asked to study the feasibility of resuming collection action on education assistance overpayments written off as uncollectible by the Veterans Administration (VA) through the use of generally accepted private-sector debt collection practices. Special attention was given to the reporting of delinquent and terminated accounts to commercial credit bureaus as a means of motivating veterans to repay their debts to the government.

GAO obtained a random sample of commercial credit reports on veterans whose accounts had been terminated as uncollectible and found that most of the veterans were employed, had an established history of paying their private-sector creditors, and had private-sector lines of credit equal to or greater than the amounts owed to VA. Several factors have hampered VA debt collection efforts and contributed to a large volume of educational assistance overpayment accounts terminated in recent years. GAO believes that the most significant problem is that veterans have been able to ignore the demands of VA for repayment with little or no fear of the adverse actions which would normally result from failure to pay debts owed to private-sector creditors.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: P.L. 97-365 of October 25, 1982, amended 28 U.S.C. 2415 to permit administrative offset of uncollectable debts beyond the 6-year statute of limitations.

    Matter: Congress should enact legislation to specify that the 6-year statute of limitations contained in 28 U.S.C. 2415 applies only to court action by the government, and that it does not include administrative collection actions by federal agencies, such as offsetting uncollectible debts owed by federal employees against their final salary payments or retirement benefits.

  2. Status: Closed - Implemented

    Comments: VA provides periodic reports on the implementation and operations of its debt collection activities.

    Matter: Congress should monitor VA collection activities to ensure prompt and effective implementation of the debt collection provisions of P.L. 96-466.

  3. Status: Closed - Implemented

    Comments: On October 25, 1982, P.L. 97-365 was enacted amending 5 U.S.C. 5514(a) to permit involuntary collection of general government debts from the current salary of federal employees.

    Matter: Congress should enact legislation to amend 5 U.S.C. 5514(a) to permit involuntary collection of general government debts from the current salary of federal employees.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Credit bureau data are being used in lieu of investigative reports. If the data can be obtained from credit bureaus, investigative reports will not be needed. VA considers this issue a low priority.

    Recommendation: The Administrator of Veterans Affairs should, on a test basis, independently verify the accuracy of investigative credit report information.

    Agency Affected: Veterans Administration

  2. Status: Closed - Implemented

    Comments: VA instructed its offices to combine current and terminated over payements in order that the total amount of the debt is pursued.

    Recommendation: The Administrator of Veterans Affairs should combine terminated and current overpayments of individual debtors so the full debt amount is pursued.

    Agency Affected: Veterans Administration

  3. Status: Closed - Implemented

    Comments: VA issued procedures for offsetting any indebtedness of a veteran from other benefits due such a veteran.

    Recommendation: The Administrator of Veterans Affairs should instruct VA regional offices to deduct outstanding overpayments from special benefit payments.

    Agency Affected: Veterans Administration

  4. Status: Closed - Not Implemented

    Comments: VA believes that scheduling repayment over a 1-year period is reasonable.

    Recommendation: The Administrator of Veterans Affairs should, to the maximum extent practicable, require payment in full rather than repayment plans for debts disclosed when matching guaranteed home loan applications with educational assistance.

    Agency Affected: Veterans Administration

  5. Status: Closed - Not Implemented

    Comments: The majority of the cases are processed by VA without obtaining any financial report.

    Recommendation: The Administrator of Veterans Affairs should, when possible, obtain debtor ability-to-pay information in a more economical manner, such as from commercial credit bureau reports.

    Agency Affected: Veterans Administration

  6. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator of Veterans Affairs should require commercial lenders to give VA veteran identification information on applicants for automatically guaranteed home loans so VA can check for indebtedness before the loans are closed.

    Agency Affected: Veterans Administration

  7. Status: Closed - Implemented

    Comments: VA expanded the referral of terminated accounts to commercial credit bureaus nationwide. It also completed and installed the data processing equipment for computing and charging interest on debts owed to VA.

    Recommendation: The Administrator of Veterans Affairs should implement immediately the debt collection provisions of P.L. 96-466 which: (1) permit VA to report delinquent and terminated accounts to commercial credit bureaus; (2) give VA attorneys the authority to litigate debt collection cases; and (3) require VA to charge interest and recover administrative collection costs on debts owed to VA.

    Agency Affected: Veterans Administration

  8. Status: Closed - Implemented

    Comments: VA conducted matches of its delinquent and terminated accounts with data file computer tapes from the Office of Personnel Management (OPM).

    Recommendation: The Administrator of Veterans Affairs should implement a program to periodically match delinquent and terminated educational assistance overpayment accounts with computer listings of current federal civilian and military personnel.

    Agency Affected: Veterans Administration

  9. Status: Closed - Implemented

    Comments: VA resumed collection action on certain terminated educational assistance debts by referring such debts to its attorneys for litigation action. Debts identified through matches with OPM files were referred to the debtor's employing agency for collection. Actions are being taken to refer debts to commercial credit bureaus to change interest and administrative costs.

    Recommendation: The Administrator of Veterans Affairs should resume collection action on terminated educational assistance overpayment accounts using the collection methods discussed in this report.

    Agency Affected: Veterans Administration

 

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