VA changes debt reporting procedure

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Veterans who owe money to the Department of Veterans Affairs will have a better chance of avoiding their debt being reported to consumer reporting agencies (CRAs). VA has modified its procedures for reporting such debts until all available efforts to collect them have been exhausted and they are classified as uncollectible. In addition, the debts of disabled and low-income veterans will not be reported to the CRAs at all, with the understanding that these veterans are entitled to free VA care.

Previously, VA reported some 530,000 debts a year to consumer reporting agencies. This resulted in approximately 60,000 outstanding debts being referred to credit reporting agencies.

The change is particularly significant in light of VA’s decision to resume debt collection effective last October 1.

“Reporting debts to consumer reporting agencies impacts creditworthiness and negative reports can cause financial hardship for veterans,” VA Secretary Denis McDonough said. “Late payment or non-payment may result in debt collection. However, overpayment of benefit funds is often an accumulated debt 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 are experiencing financial hardship.

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