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Massive DFAS Debt - Bonus Overpayment

The last post in this topic was posted 1576 days ago. 

 

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I've been lurking a while and decided to reach out to the members regarding my situation. Any guidance is appreciated. I will check this post often to respond to requests for clarification, further detail, etc.

 

The short version is this: I was paid a large reenlistment bonus and then involuntarily separated shortly after, leaving myself in about 30K of debt to the federal government. (I don't recall what I actually received, but after taxes and some algorithmic proration, it certainly wasn't near that amount.) I was offered an astonishingly outrageous repayment plan to the tune of $1000/mo and that's the last I spoke with DFAS. The debt went live on 7/2009.

 

My problem is now two-fold. The debt is still showing on my EQ, because for some reason, it wasn't reported to them as DOFD until 11/2012. It looks like it will be hanging around that report for a few more years if that is in fact the date the reporting SOL begins. It seems to have come off my EX, and my TU indicates it should come off 7/2016, though as of this post, it has not.

 

This is a federal debt, so it obviously won't go away, and I've been having my taxes offset for the past several years with my 1-2k refunds barely tickling the interest that accrues each year.

 

Thus far, the government has been satisfied intercepting my tax refund, but of course that could change at any moment and I could face wage garnishments and other more aggressive collections.

 

I'm working on rebuilding my credit, but this gigantic outstanding debt obviously will hamper my efforts, especially if it hangs on one of my reports for 3 more years. Most negative accounts have aged off my report, and the ones that haven't I can probably get cleared with some work on my part. Other than a $300 unsecured CC, I have no other current open accounts and if not for this gov't debt, I would essentially have a clean slate to build off of.

 

After explaining all that, I suppose my questions are as follows:

 

1. Should I hire an attorney and file a BK7 to attempt to get rid of this thing entirely?

2. Would the BK on my CRs be worth the peace of mind of getting rid of it (if that's even possible) or would that set me back even further when trying to rebuild my credit?

3. Should I request removal of the item from my credit reports, as the debt is certainly old enough to be removed and EQ was obviously misreported, or avoid "poking the bear" so to speak?

4. Is there an option I'm not considering?

 

These government debts are their own animals, I'm sure, but any insight or guidance would be appreciated. This albatross has been haunting me for nearly 8 years now, and I'm hoping to figure something out that doesn't involve paying out $1000/mo. for the next few years.

 

 

 

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I haven't a clue as to how to handle these, but I'm very interested to hear what others say. I've some friends who ended up owing DFAS large sums of $$ and they have always said its a nightmare.

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Based on my research, this debt is dischargable after 5 years of the termination of the contract. I haven't found an instance where DFAS disputed the discharge of the debt, but information regarding this situation is surprisingly scarce.

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Not trying to thread-bomb here, but just wanted to add that my gut tells me to let it ride, clean stuff off my credit where possible and stay away from BK unless they get more aggressive.

 

We do see a portion of our refund thanks to injured spouse filing and us being in a community property state, so I can live with that forever, I guess.

 

I'm just concerned about how risky it may be trying to get these lines removed from my CRs.

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Seems like an odd question to ask someone on a credit-rebuilding forum, but I'll bite.

 

As I stated, the payment program they offered me was $1000/mo. This was beyond impossible, as I had obviously just lost my job and had no marketable skills to get a job with suitable income to make that feasible.

 

I didn't pay it because I didn't have the money. I have a decent job now, but still, $1000/mo is as impossible now as it was then.

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Seems like an odd question to ask someone on a credit-rebuilding forum, but I'll bite.

As I stated, the payment program they offered me was $1000/mo. This was beyond impossible, as I had obviously just lost my job and had no marketable skills to get a job with suitable income to make that feasible.

I didn't pay it because I didn't have the money. I have a decent job now, but still, $1000/mo is as impossible now as it was then.

It is an odd question.

 

You'll need to excise DollarDog as he's a newbie. Obviously knows squat about military service. Perhaps the reading portion of the ASVAB was a challenge. ;)

 

You are right about it being dischargable. Once you file, DFAS pretty much fades away.

Edited by PotO

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Thanks for the reply.

 

The main question is, is it "worth it" or even possible to file a BK on just one item, as it's literally the only debt I have.

Edited by TomInRenoNV

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I was paid a large reenlistment bonus and then involuntarily separated

 

I'm going to presume OP was RIF'ed instead of any of the various less-than-honorable discharges. That's pretty shady of the Government to get its service members to re-enlist then turn right around and RIF them.

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Thanks for the reply.

 

The main question is, is it "worth it" or even possible to file a BK on just one item, as it's literally the only debt I have.

That depends on the amount of assets you have, if this is the only large debt you have you may not pass a means test for BK.

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That depends on the amount of assets you have, if this is the only large debt you have you may not pass a means test for BK.

 

Indeed. I have none assets. Liquid or otherwise. Two paid-for-with cash cars in the household for two drivers. Both worth less than $3000 each.

 

I think I'll back-burner the BK unless I get served on it. It's 7 years old, so I FEEL like the odds of that happening are slim. I've requested the item off of my credit report as obsolete, so hopefully stirring the pot doesn't inspire them to take 15% of my wages. I just want it off of my credit and they can keep taking my half of the tax return.

 

As far as why it happened, yes, it was shady. Do I owe it, though? I'd say part of it. Certainly not what they're demanding though.

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I was paid a large reenlistment bonus and then involuntarily separated

 

I'm going to presume OP was RIF'ed instead of any of the various less-than-honorable discharges. That's pretty shady of the Government to get its service members to re-enlist then turn right around and RIF them.

It could have been any number of other reasons, too. People get admin discharges for a number of reasons that don't result in less-than-honorable discharges. A prime example would be separation for medical reasons. Contrary to popular belief, medical discharges are not uncommon and most do not qualify the individual for any type of retirement pay.

 

Or it could be that your CO just doesn't like you. It's not difficult at all to come up with a reason why someone you don't like should be pushed out and then follow through.

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Not too difficult to get your TS/SCI security clearance revoked for spurious reasons and lose your job that way, either. Hypothetically.

There are a hundred ways to do that. :lol:

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It's for sure off my EX.

 

Both the EQ and TU have disputes in now about the account being obsolete. I don't see TU putting up too much of a fuss, as the report itself already indicates 7/2016 it should be removed. EQ, I'm holding my breath for as they don't have it reported DOFD until 11/2012. The dispute I filed was for incorrect DOFD, which should be the date the account reflects it was opened. It would really annoy me if EQ is the only report that keeps this thing on until 2019...

 

I wonder where EQ will look to find the DOFD?

 

EQ also had a VA Education debt marked as unpaid that was paid in 05/2016, so I disputed that as paid as well.

Edited by TomInRenoNV

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Should this be coming off now? Is gov't debt different? I thought it would be 7.5 years from DOFD.

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I owed DFAS about $1,000 when I transferred and my medical insurance didn't transfer with me.

They kept coverage but weren't taking it out of my checks.

I just signed a form and had them deduct double from every paycheck until I was caught up.

 

They were willing to go as low as $5 per paycheck if I recall. Maybe that is an option.

Edited by CreditNewb15

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Should this be coming off now? Is gov't debt different? I thought it would be 7.5 years from DOFD.

I was going off the TU Estimated date of removal of 07/2016. That's what they said anyway.

 

I'm most concerned about then coming to collect on it now after all these years.

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What's the real date and can you prove it? You probably didn't lemonade off Uncle Sam himself, just some individual assigned to collect the money. :D They can get pissed off and they can come after you, but they can't reage a debt just to poison your credit report.

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Real date is 07/2009. I can't "prove it" other than the fact that it's that way on my other reports, and it didn't exist as an account until it was delinquent which was 07/2009. My EQ dispute came back verified for date of last activity, which isn't even what I disputed...

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Well, they HAVE reaged the debt. TU just came back verified, no change. I have a report from 5/2016 saying it was scheduled to delete on 07/2016. They are now showing it scheduled to delete 07/2021.

 

So, what do I do now? Sue the government for purposely poisoning my report or keep mailing TU documentation proving that it's obviously being reaged?

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