Bottom Line Up Front: Surprise DFAS overpayment debt can devastate your finances—$5,000-$15,000 debt notices are common, with potential wage garnishment. BUT you have rights under DoD Financial Management Regulation (FMR). Most overpayments result from travel voucher errors, BAH timing mistakes, or promotion pay miscalculations. You can dispute invalid debts, negotiate installment plans (12-36 months), and request hardship waivers. Key: Don't ignore the notice—you have 30 days to respond before automatic garnishment begins (up to 15% of disposable pay). LES auditing prevents 70%+ of overpayments.
Table of Contents
- How DFAS Overpayments Happen
- Your Rights Under DoD Financial Management Regulation
- The DFAS Debt Collection Process
- Disputing an Overpayment
- Repayment Plan Negotiation
- When to Accept Liability vs. Fight
- Preventing Future Overpayments
- Credit Score Impact
- Common Mistakes
- Action Steps
- FAQ
How DFAS Overpayments Happen
Top 5 Causes of Military Pay Overpayments
1. Travel Voucher Errors (40% of overpayments)
This is the #1 source of DFAS overpayments because travel vouchers are complex and most service members don't fully understand Joint Travel Regulations (JTR).
Common mistakes:
Claiming mileage for rental car instead of POV: If you rent a car during PCS, you can claim the rental cost OR mileage to duty station—NOT both. Service members often claim full mileage (18,000 miles × $0.67/mile = $12,060) when they should only claim rental car cost ($400). Result: $11,660 overpayment that DFAS catches 6-12 months later.
Per diem miscalculations: Per diem is calculated by travel days, not calendar days. If you departed at 3pm on Monday and arrived at 2pm on Thursday, that's 3 days of travel (not 4). Claiming 4 days of per diem when you're only entitled to 3 days = overpayment. Rates also vary by location—using CONUS rate for OCONUS travel (or vice versa) triggers audits.
Missing receipts for lodging over $75: JTR requires receipts for any lodging over $75/night. Service members claim $150/night hotel for 10 nights ($1,500) but only have receipts for 6 nights. DFAS audit = $600 overpayment ($150 × 4 nights without receipts).
Claiming expenses spouse incurred: Only the authorized traveler can claim expenses. If your spouse drove a second vehicle or stayed in hotel while you were in temporary lodging, those costs are NOT reimbursable unless spouse is also on orders (rare). Many service members add spouse's gas, meals, and lodging to voucher. DFAS catches it = entire spouse expenses are overpayment.
Double-dipping: TLE + per diem: Temporary Lodging Expense (TLE) and per diem cannot be claimed for the same days. TLE covers hotel + meals near duty station (up to 10 days). Per diem covers meals during travel. Claiming both for overlapping days = overpayment of $100-200/day.
Real example: E-5 PCSing from Fort Hood to Fort Bragg claimed $3,200 in travel expenses:
- Mileage: 1,200 miles × $0.67 = $804
- Lodging: 3 nights × $150 = $450
- Per diem: 4 days × $60 = $240
- Rental car: $300
- Spouse vehicle: $200 (spouse drove second car with household goods)
- TLE: 5 days × $180 = $900
- Total claimed: $3,200
DFAS audit found:
- Rental car claimed AND mileage claimed (pick one) = $804 overpayment
- Spouse vehicle not authorized (spouse not on orders) = $200 overpayment
- TLE overlapped with per diem by 1 day = $180 overpayment
- Lodging receipt missing for 1 night = $150 overpayment
- Total overpayment: $1,334
DFAS sent debt notice 8 months later demanding repayment + interest.
2. BAH Timing and Dependent Status (30% of overpayments)
BAH (Basic Allowance for Housing) adjusts based on dependent status and location. Life changes affect BAH rates, but DFAS systems don't auto-update—YOU must report changes. Delays = overpayments.
Getting married but BAH starts before marriage date: BAH-with-dependents effective date is the marriage date, NOT the date you update DEERS. If you get married March 15 but don't update DEERS until April 10, and DFAS back-pays you BAH-with-dependents to March 1 (common system error), you received 14 days of BAH you weren't entitled to. In high-BAH areas like San Diego ($3,000/month), 14 days = $1,400 overpayment.
Divorce but didn't update DEERS: This is the costliest BAH overpayment. Divorce finalizes January 15. You're busy, stressed, forget to update DEERS. DFAS continues paying BAH-with-dependents ($2,400/month) instead of BAH-without-dependents ($1,800/month). Difference: $600/month. Six months later (June), finance office catches the error during routine audit. Overpayment: $600 × 6 = $3,600. Many service members don't catch this for 12-18 months = $7,200-$10,800 overpayment.
PCS move: BAH overpaid at old location: BAH changes to new location's rate on your report date (or effective date of orders, whichever is later). If you PCS from Fort Hood (MHA TX210, $1,800/month) to Fort Bragg (MHA NC182, $1,500/month) on June 1, you should receive Fort Bragg BAH effective June 1. But if DFAS systems delay update, you might receive Fort Hood BAH (higher rate) through June 30. Overpayment: $300 for June. Multiply by however long it takes DFAS to correct = $300-900 overpayment.
Child turns 21, no longer dependent: BAH-with-dependents continues as long as you have dependent children. Child turns 21 = no longer a dependent for BAH purposes (unless full-time student, which has specific rules). You must update DEERS to remove child as dependent. Don't update? You continue receiving BAH-with-dependents when you should revert to BAH-without-dependents (or even BAH-single if that was your last dependent). Overpayment compounds monthly.
Real example: E-6 divorced in January. Divorce decree finalized January 20. Service member was overwhelmed with custody arrangements, moving into barracks, didn't think about DEERS update. Finance office caught error during July LES audit. E-6 had received BAH-with-dependents for 6 months when entitled to BAH-without-dependents.
Numbers:
- BAH-with-dependents (E-6, Fort Campbell): $1,650/month
- BAH-without-dependents (E-6, Fort Campbell): $1,200/month
- Overpayment per month: $450
- Months overpaid: 6 (Jan-June)
- Total debt: $2,700
DFAS demanded repayment. E-6 argued: "I didn't know I had to update DEERS." DFAS response: "Your responsibility under regulations." No waiver. Negotiated 18-month installment plan: $150/month.
3. Promotion Timing and Retroactive Pay (15% of overpayments)
Promotions often involve retroactive pay adjustments—you're promoted effective March 1, but paperwork doesn't process until May. DFAS back-pays you March and April at new rate. This creates confusion and system errors.
Promoted retroactively, system overpays future months: DFAS systems sometimes misinterpret retroactive promotions. You're promoted E-5 to E-6 effective March 1 (TIG date). System processes in May and back-pays March-April correctly. But system also applies E-6 rate to FUTURE months when you should still be E-5 (because TIS or other requirement wasn't met yet). You receive 2-3 months of overpayment before audit catches it.
Frocking vs. actual promotion pay date: Frocking = wearing rank before actually earning it (common in Army/Navy for E-5 and above). You can be frocked to E-6 on January 1 but not actually paid E-6 until TIG date (March 1). Many service members assume frocking = pay increase. DFAS pays you E-6 rate immediately, then audits and realizes TIG wasn't met. Overpayment = $400-600/month × 2 months = $800-1,200.
TIG/TIS calculations wrong: Time in Grade (TIG) and Time in Service (TIS) determine promotion eligibility. If promotion orders have incorrect TIG date (typo, system error, admin mistake), you get paid too early. DFAS audits, recalculates, and demands repayment of the difference.
Real example: E-5 frocked to E-6 on January 1. Started wearing E-6 rank immediately. Finance office adjusted pay to E-6 rate effective January 1. TIG requirement for E-6 pay was March 1 (needs 48 months TIG as E-5). Service member received E-6 pay for January and February when only entitled to E-5 pay.
Overpayment:
- E-6 pay: $3,600/month
- E-5 pay: $3,200/month
- Difference: $400/month
- Months overpaid: 2 (Jan, Feb)
- Total debt: $800
Some service members don't discover error until years later during PCS or ETS when full pay audit happens. By then, overpayment could be $4,800-9,600 (12-24 months).
4. Separation/Terminal Leave Overpayments (10% of overpayments)
When separating or retiring, final pay calculations involve leave sell-back, prorated bonuses, and advance pay reconciliation. Errors here hit when you're already out and have no military paycheck to offset.
Final pay includes unearned leave days: You're entitled to sell back up to 60 days of unused leave at separation. But if DFAS calculates earned leave incorrectly (didn't account for negative leave taken earlier, or counted leave accrued in final month you weren't actually in service), you're paid for leave you didn't earn. DFAS recalculates 2-6 months later = overpayment demand.
SRB or bonus pro-rated, must return portion: Selective Reenlistment Bonus (SRB) or other bonuses are pro-rated based on time served. If you receive $20,000 bonus for 6-year reenlistment but separate at year 4, you must return 2/6 = $6,667. If bonus wasn't recouped before separation, DFAS bills you.
Advance pay not fully repaid: Advance pay (typically given for PCS moves) must be repaid through monthly deductions. If you separate before advance is fully repaid, remaining balance becomes debt. Example: $3,000 advance, repaying $150/month, separate after 10 months = $1,500 still owed.
Real example: O-3 separated after 10 years. Final pay included sell-back of 52 days of leave. DFAS calculated 52 days × $300/day (O-3 base pay rate) = $15,600 paid at separation. Three months later, DFAS audited and found service member had taken advance leave in final year that wasn't accounted for. Actual earned leave: 38 days (not 52). Overpayment: 14 days × $300 = $4,200. By then, O-3 was civilian, no longer had military pay to offset. DFAS demanded repayment via debt letter.
5. Allowances and Special Pays (5% of overpayments)
Special pays (flight pay, dive pay, foreign language pay, etc.) are conditioned on maintaining qualifications. Lose qualification = lose pay. But systems don't always auto-stop payments.
Foreign Language Proficiency Pay (FLPP) rescinded after failed retest: FLPP pays $100-500/month for certified language proficiency. Must retest every 2-3 years. Fail retest = lose FLPP effective test date. But if you don't immediately notify finance, FLPP continues for months. Overpayment = $100-500/month × however long it took to stop.
Flight pay continued after medical grounding: Aviators receive flight pay ($150-1,000/month depending on years and status). Medical grounding (temporary or permanent) stops flight pay effective grounding date. If you're grounded in March but finance doesn't process until November, you received 8 months of flight pay you weren't entitled to. Overpayment = $225/month × 8 = $1,800.
Dive pay, jump pay, hazard pay after qualification expires: These pays require current certifications and active duty in that role. Certification expires or you transfer to non-diving/non-jumping billet = pay stops. Delays in updating records = continued payments = overpayments.
BAS overpaid during meal-card periods: Basic Allowance for Subsistence (BAS) is for meals. If you're issued a meal card (dining facility), you should NOT receive BAS. Some service members are double-dipping—meal card AND BAS. DFAS audits catch this = months of BAS overpayment ($460/month for enlisted).
Real example: O-2 Navy pilot medically grounded in February due to vision disqualification. Submitted paperwork to flight surgeon and commanding officer. But paperwork sat on desk for weeks. Finance office wasn't notified until October (8 months later). Flight pay had continued: $225/month × 8 = $1,800 overpayment. DFAS demanded repayment.
Pro Tip: 70% of overpayments are caught AFTER the money is already spent. Monthly LES auditing catches errors before they snowball into debt.
Your Rights Under DoD FMR
DoD Financial Management Regulation (FMR) Section 020502
Your 5 Core Rights:
1. Right to Written Notice DFAS must send you a formal debt letter before taking collection action. This letter must include: exact debt amount, explanation of how overpayment occurred, affected pay periods, repayment deadline, instructions for disputing, and contact information. If you never received written notice, you have grounds to challenge any collection action. Always check MyPay inbox and update mailing address in DEERS—DFAS sends letters to address on file, and "I didn't get it" isn't a valid defense if it was sent to your official address of record.
2. Right to 30-Day Response Period From the date on the debt letter (not the date you received it), you have 30 calendar days to respond. "Respond" means: dispute the debt in writing, request a hearing, or request an installment plan. DFAS cannot begin garnishment before this 30-day window expires. If you respond within 30 days, garnishment is suspended until your dispute/hearing is resolved. Miss the 30-day deadline = automatic garnishment begins, usually at maximum rate (15% of disposable pay).
3. Right to Hearing / Reconsideration You can request a hearing to dispute the debt. If amount is >$1,500, you're entitled to a formal hearing (oral testimony, present evidence, question witnesses). If amount is <$1,500, you get an informal review (written submissions only, no oral hearing). Requesting a hearing STOPS collection activity until decision is issued. Hearings take 60-120 days to resolve, giving you breathing room. Use this time to gather evidence and consult legal assistance.
4. Right to Installment Repayment Plan You don't have to pay the debt in a lump sum. You can request an installment plan, typically 12-36 months. DFAS will review your financial situation and approve a monthly payment amount (usually 5-10% of net pay). If you prove financial hardship (can't afford basic necessities while repaying), you can request lower monthly payments or even a partial waiver of the debt. Hardship waivers are rarely granted (15-20% approval rate), but installment plans are almost always approved (80%+ approval).
5. Right to Appeal Garnishment Amount Maximum garnishment is 15% of disposable pay (gross pay minus taxes and mandatory deductions). If 15% would cause financial hardship (can't pay rent, food, utilities), you can request a lower garnishment rate. Submit financial hardship statement showing income vs. expenses. DFAS may reduce to 5-10% if hardship is severe. They won't stop garnishment entirely (except during formal hearing process), but they can reduce the monthly amount.
What DFAS Cannot Do
❌ Cannot garnish more than 15% of disposable pay (without court order) ❌ Cannot report to credit bureaus until 60 days after final notice (and only if >$25) ❌ Cannot deny hearing request if made within 30 days ❌ Cannot force immediate full repayment (except in fraud cases) ❌ Cannot collect debt if statute of limitations expired (typically 6 years)
⚠️ Warning: These rights only apply if you respond within 30 days. Miss the deadline = automatic garnishment at maximum rate.
The DFAS Debt Collection Process
Timeline: What Happens When
| Day | Event | Your Action |
|---|---|---|
| Day 0 | DFAS discovers overpayment | None yet (you don't know) |
| Day 1-30 | DFAS sends debt letter (first notice) | Open and read immediately |
| Day 30 | Response deadline | Must respond by this date |
| Day 31-60 | DFAS reviews your response | Wait for decision |
| Day 45 | If no response: Second notice sent | Last chance to respond |
| Day 60 | If still no response: Garnishment begins | 15% of pay withheld automatically |
| Day 90 | Debt sent to Treasury Offset Program | Tax refunds seized |
| Day 120 | Reported to credit bureaus | Credit score drops 50-100 points |
What the Debt Letter Contains
Section 1: Debt Amount Shows the exact dollar amount you owe. This includes the original overpayment (principal) plus any interest that has accrued. Interest is simple interest at the current Treasury rate (typically 4-6% annually), calculated from the date the overpayment occurred. Example: $5,000 overpayment from 12 months ago at 5% = $250 interest. Total owed: $5,250. The letter will break this down: "Principal: $5,000, Interest: $250, Total Due: $5,250."
Section 2: Reason for Debt Explains WHY you owe money. Lists the affected pay periods (e.g., "January 2025 through May 2025"), type of overpayment (e.g., "BAH-with-dependents overpaid due to divorce not reported"), and shows the calculation. Example: "You received BAH-with-dependents ($2,400/month) but were only entitled to BAH-without-dependents ($1,800/month). Overpayment: $600/month × 5 months = $3,000." This section is critical for disputing—if their math is wrong, you have grounds to challenge.
Section 3: Repayment Options Tells you how to pay. Option 1: Lump sum payment by specific date (usually 30-60 days from letter date). Provides payment methods (check, money order, MyPay). Option 2: Request installment plan using DD Form 2789 (included or referenced). Shows contact information for DFAS debt collection office (phone, email, mailing address). Some letters include a payment coupon you can return with check.
Section 4: Your Rights Lists your legal rights under DoD FMR. Right to dispute within 30 days, right to request hearing, right to installment plan, garnishment limits (15% max), right to waiver request if financial hardship. This section also explains how to exercise these rights (where to send dispute letter, what forms to complete, deadlines). Many service members skip reading this section—DON'T. It's your playbook for responding.
Section 5: Consequences of Non-Payment Warns what happens if you ignore the debt. Day 60: Automatic garnishment begins (15% of disposable pay). Day 90: Debt referred to Treasury Offset Program (your tax refunds will be seized to pay debt). Day 120: Debt reported to credit bureaus (damages credit score). Additional consequences may include: referral to collection agency, loss of security clearance (if debt creates financial hardship), inability to reenlist or extend (outstanding debt can block these). Also mentions accruing interest and potential collection fees.
Pro Tip: Take photo of debt letter immediately and save in cloud storage. You'll need exact wording when disputing or negotiating.
Disputing an Overpayment
When You Should Dispute (Valid Grounds)
1. The Overpayment Never Happened DFAS made a calculation error or database glitch. Their records show you received extra pay, but when you review your LES history, you didn't actually receive it. Maybe the payment was reversed, or the system double-counted something. You can prove with bank statements that the money never hit your account. Or DFAS sent a duplicate debt notice—you already paid this debt 2 years ago but it's showing up again in their system. Gather evidence: bank statements showing deposits match LES, previous payment records, corrected LES.
2. The Amount is Incorrect You acknowledge an overpayment occurred, but DFAS's math is wrong. They claim $8,000, you calculate $5,500. Common errors: wrong number of months, wrong BAH rate used in calculation, interest calculated incorrectly, or they counted the same months twice. Example: DFAS claims you received BAH-with-dependents for 12 months when it was only 8 months. Show your work: "BAH overpayment = $400/month × 8 months = $3,200, not $4,800 as claimed."
3. You Notified Finance but Update Was Delayed You did everything right—reported divorce to DEERS within 30 days, visited finance office, submitted paperwork. But finance office lost the paperwork, or it sat on someone's desk for 3 months, or DEERS updated but didn't sync to DFAS systems. You have proof: signed receipt from finance office, DEERS update confirmation, emails to finance office. You should not be penalized for admin delays beyond your control. This is a strong dispute if you have documentation.
4. The Debt is Too Old (Statute of Limitations) Federal law (28 U.S.C. § 2415) generally limits government debt collection to 6 years from when the debt accrued. If DFAS is trying to collect a debt from 7+ years ago, you can challenge based on statute of limitations. Calculate: When did the overpayment occur? If it's been >6 years and you never acknowledged the debt or made any payments (which would restart the clock), cite statute of limitations in your dispute. DFAS must prove the debt is within the 6-year window or that the clock was validly restarted.
5. You Never Received Proper Notice Debt letter was sent to your old address (you PCSed 6 months ago and updated DEERS, but DFAS was still using old address). First time you learned about debt was when garnishment started. DoD FMR requires proper notice before collection action. If you can prove you never received the initial debt letter (it went to wrong address through no fault of your own), garnishment should be reversed and you should get a fresh 30-day response period. Document: DEERS address update date, when garnishment started, when you first learned of debt.
How to File a Dispute
Step 1: Write Dispute Letter (within 30 days of receiving notice)
Required elements:
- Your name, SSN, contact info
- Debt notice date and reference number
- Specific amount you're disputing
- Detailed explanation of why it's incorrect
- Supporting documentation (see below)
- Requested outcome (debt removal, recalculation, etc.)
Step 2: Gather Supporting Documentation
For travel voucher disputes:
- Original travel orders
- Approved travel voucher (certified copy from finance)
- Receipts for all expenses
- Mileage calculations with dates/locations
For BAH/dependent disputes:
- Marriage certificate or divorce decree with dates
- DEERS update confirmation
- Finance office submission receipts (proving timely notification)
- Previous LES showing correct BAH
For promotion disputes:
- Promotion orders with effective dates
- Previous LES showing correct pay grade
- Frocking memo if applicable
Step 3: Submit Dispute Package
Send to: Defense Finance and Accounting Service DFAS-Cleveland (CL) Attention: Collections P.O. Box 998002 Cleveland, OH 44199-8002
Email: askdfas@dfas.mil (for status inquiries only, not official disputes)
Send via certified mail with return receipt (proof you sent within 30 days)
Step 4: Request Hearing (if dispute amount >$1,500)
Hearing types:
- Informal review: Written submission, no in-person appearance, decision within 60 days
- Formal hearing: In-person or phone testimony, more evidence allowed, decision within 90 days
⚠️ Warning: Requesting hearing STOPS garnishment until decision is made (can buy 2-3 months time).
Repayment Plan Negotiation
Standard Installment Plans
| Debt Amount | Monthly Payment | Duration | Total Interest |
|---|---|---|---|
| $1,000-$3,000 | $100-$250 | 12 months | ~$50-$150 |
| $3,000-$6,000 | $200-$400 | 18 months | ~$150-$300 |
| $6,000-$10,000 | $300-$500 | 24 months | ~$300-$600 |
| $10,000-$20,000 | $400-$800 | 30-36 months | ~$600-$1,200 |
Interest rate: Treasury rate (currently ~4.5-5.5%/year, compounded annually)
Requesting Installment Plan
How to apply:
- Complete DD Form 2789 (Waiver/Remission Application)
- Include financial hardship statement
- Propose monthly payment amount (must be "reasonable" = 5-10% of net pay)
- Submit within 30 days of debt notice
DFAS approval factors:
- Size of monthly payment proposed
- Your rank/pay grade
- Financial hardship evidence
- Repayment history (if prior debts)
Typical approval rate: 80%+ for plans 12-24 months, 60% for plans 25-36 months
Hardship Waiver (Forgiveness) Criteria
You may qualify for partial or full waiver if:
- Overpayment was NOT your fault (finance office error, DFAS system glitch)
- You had no reason to know you were overpaid (BAH rate didn't obviously change)
- Repayment would cause "severe financial hardship" (can't pay basic bills)
- You relied on the overpayment in good faith (spent it thinking it was correct pay)
Required for waiver application:
- Complete budget worksheet (income vs. expenses)
- Bank statements (past 3 months)
- Evidence you didn't cause overpayment
- Explanation of financial hardship
Approval rate: ~15-20% (DFAS is strict on waivers)
Real Example: E-5 with $8,000 BAH overpayment (divorce not reported):
- Applied for waiver (denied—SM's responsibility to report divorce)
- Negotiated 24-month installment plan: $350/month
- Total repayment: $8,400 ($8,000 debt + $400 interest)
- vs. Lump sum garnishment would have taken 15% of pay for 10 months = severe financial strain
When to Accept Liability vs. Fight
Decision Framework
ACCEPT LIABILITY IF:
- ✅ You clearly received money you weren't entitled to
- ✅ You knew or should have known (BAH with dependents after divorce, travel voucher you inflated)
- ✅ Fighting will cost more than debt (legal fees, time, stress)
- ✅ You can afford reasonable installment plan
FIGHT IF:
- ✅ DFAS calculation is provably wrong (math error, wrong pay period)
- ✅ You notified finance office timely but update was delayed
- ✅ System error, not your fault (DFAS paid you wrong amount despite correct DEERS)
- ✅ Debt exceeds statute of limitations (>6 years old)
- ✅ Amount is significant (>$5,000) and you have strong evidence
Cost-Benefit Analysis
Example: $3,000 debt, you think DFAS is wrong
Option A: Fight it
- Cost: 10-20 hours of time, $500 if you hire legal help
- Success rate: 30% (if you have good evidence)
- Outcome if win: $3,000 debt eliminated
- Outcome if lose: Still owe $3,000 + 3 months of interest (~$40)
Option B: Accept and negotiate installment plan
- Cost: 2 hours of time, no legal fees
- Success rate: 80% get approved for installments
- Outcome: $3,000 debt + ~$150 interest, paid over 18 months = $175/month
Recommendation: Fight if >$5,000 AND you have documentation. Accept and negotiate if <$3,000 or weak evidence.
Preventing Future Overpayments
Monthly LES Auditing (10 Minutes/Month)
What to check every month:
- Base pay matches your rank/TIG (check DFAS pay chart)
- BAH matches your ZIP code + dependent status (check DFAS BAH calculator)
- BAS is correct (standard rates by officer/enlisted)
- Special pays (flight, sea, hazard) match current qualifications
- Deductions (SGLI, TSP, allotments) are what you authorized
- Travel voucher amounts match your submission
- No mystery payments (debt repayments, one-time pays without explanation)
⚠️ If anything looks wrong: Go to finance office SAME DAY and get it corrected before next payday.
Pro Tip: Use Garrison Ledger's LES Auditor tool (free scan of your LES) to catch 70%+ of errors automatically.
Critical Life Events to Report Immediately
| Event | Report Within | What Happens If Delayed |
|---|---|---|
| Marriage | 30 days | BAH adjustment delayed, miss entitled pay |
| Divorce | 30 days | BAH overpayment, potential $5K-$10K debt |
| Birth/adoption | 30 days | BAH adjustment delayed, miss entitled pay |
| Child turns 21 | Before next payday | BAH overpayment if not sole dependent |
| PCS move | 10 days before | BAH at wrong location, potential overpayment |
| Loss of flight status | Immediately | Flight pay overpayment, $200-1,000/month |
| Separation date change | 30 days | Terminal leave miscalculation, final pay issues |
Documentation Best Practices
Save for 6 years:
- All LES (digital and printed)
- DEERS update confirmations
- Finance office visit receipts
- Marriage/divorce certificates
- PCS orders and travel vouchers
- Medical grounding/flight status letters
Storage: Google Drive or Dropbox folder organized by year and type. Takes 5 minutes/month, saves you if DFAS disputes anything.
Credit Score Impact
How DFAS Debt Affects Your Credit
Timeline of credit reporting:
- Day 0-60: No credit impact (debt not yet reported)
- Day 60: DFAS sends debt to Treasury Offset Program
- Day 90-120: Debt reported to credit bureaus (if >$25)
- Impact: Credit score drops 50-100 points
What appears on credit report:
- "Defense Finance and Accounting Service - Government Debt"
- Original debt amount
- Current balance
- Status: "In Collection" or "Paid"
How long it stays:
- If paid: 7 years from paid date
- If unpaid: 7 years from default date
- If disputed successfully: Removed immediately (request deletion letter)
Preventing Credit Damage
Option 1: Pay Before Day 90 (before credit reporting)
- Negotiate lump sum discount (offer 80-90% if you can pay immediately)
- DFAS sometimes accepts reduced amount to avoid collection costs
Option 2: Request Credit Bureau Deletion (if repaid)
- After full repayment, send letter to DFAS requesting deletion
- Not guaranteed, but approved ~30% of time if paid within 6 months
Option 3: Dispute with Credit Bureaus (if debt is invalid)
- Send dispute letter to Equifax, Experian, TransUnion
- Include documentation proving debt is incorrect
- Bureau must investigate within 30 days
Real Example: E-6 with $6,500 debt ignored for 120 days:
- Credit score dropped from 720 to 630 (90-point drop)
- Couldn't refinance mortgage (rate 1.5% higher = $18K over life of loan)
- Repaid debt in full, requested deletion—approved after 90 days
- Credit score recovered to 710 within 6 months
Common Mistakes & How to Avoid Them
❌ Mistake #1: Ignoring the Debt Letter
Result: Automatic garnishment at 15% of disposable pay starting Day 60. No installment plan option. Credit reporting at Day 90. Tax refund seizure. Collection fees added to debt.
Fix: Open and read debt letter immediately. Respond within 30 days even if just to request installment plan.
❌ Mistake #2: Not Documenting Finance Office Visits
Result: Can't prove you reported marriage/divorce timely. DFAS assumes you delayed = your fault = no waiver. End up liable for full debt.
Fix: Get receipt or confirmation number EVERY TIME you visit finance office. Take photo of submission. Save in "Finance Docs" folder.
❌ Mistake #3: Spending the Overpayment Before It's Caught
Result: $8,000 overpayment spent on vacation, new car, etc. DFAS demands repayment. You don't have it. Forced into 36-month high-interest plan or severe garnishment.
Fix: If LES shows mysterious payment increase, verify it's correct BEFORE spending. Call DFAS: 1-888-332-7411. If can't explain it, set aside in savings until confirmed.
❌ Mistake #4: Accepting Garnishment Without Negotiating
Result: 15% of your paycheck disappears for 12-24 months. Causes financial crisis—can't pay rent, car note, bills. Better options existed but you didn't ask.
Fix: Always request installment plan within 30 days. Propose 5-8% of net pay over 24-36 months. DFAS approves 80%+ of reasonable requests.
❌ Mistake #5: Not Checking LES Every Month
Result: Overpayment continues for 6-12 months before caught. Small $500 error becomes $6,000 debt. Harder to dispute, harder to repay.
Fix: Audit LES every month (10 minutes). Use LES Auditor tool (automated check). Catch errors when they're $200, not $6,000.
Action Steps
If You Just Received Debt Notice (Do This Week)
- Open debt letter and read completely (don't panic, just read)
- Note the response deadline (30 days from letter date)
- Pull all LES for affected pay periods (DFAS MyPay or finance office)
- Gather documentation (marriage cert, DEERS updates, travel vouchers)
- Calculate if amount is correct (use DFAS pay charts and BAH calculator)
- Decide: Dispute, negotiate installment plan, or pay lump sum
- Draft response letter (dispute or installment request)
- Send via certified mail (proof of timely response)
If You're Already in Garnishment (Do This Week)
- Request immediate review (still possible to negotiate even after garnishment starts)
- Apply for hardship waiver if applicable (financial hardship statement + budget)
- Propose lower monthly payment (5-8% of net pay vs. 15% garnishment)
- Consider borrowing from TSP or personal loan (4-8% interest vs. losing 15% of pay)
- Set up automatic payment (avoid missed payment fees)
Ongoing: Prevent Future Overpayments
- Monthly: Audit your LES (10 minutes, check base pay, BAH, allowances)
- Immediately: Report life changes (marriage, divorce, child, PCS within 30 days)
- Always: Document finance office visits (get receipts, take photos)
- Before PCS: Verify final voucher amounts (most common overpayment source)
- Annually: Review DEERS for accuracy (dependents, BAH status, contact info)
Frequently Asked Questions
Q: Can DFAS garnish my entire paycheck for overpayment?
A: No. Maximum garnishment is 15% of "disposable pay" (after taxes and mandatory deductions). You can request lower amount if financial hardship. DFAS cannot legally take more than 15% without court order (extremely rare).
Q: How long does DFAS have to collect an overpayment?
A: 6 years from date overpayment occurred (statute of limitations). After 6 years, debt is legally uncollectible. BUT if you make ANY payment, clock resets. Don't pay old debt without checking statute first.
Q: Will DFAS overpayment debt affect my security clearance?
A: Potentially yes if unpaid and reported to credit bureaus. Clearance adjudicators check for financial problems. BUT: Being in approved repayment plan shows responsibility—usually no clearance impact. Ignoring debt = red flag.
Q: Can I use my TSP to pay off DFAS debt?
A: Yes, you can take TSP loan (up to $50,000, 5-year repayment) or hardship withdrawal. TSP loan interest ~4-5% vs. DFAS debt interest ~4.5% = roughly equal. Consider if garnishment is causing immediate crisis.
Q: What if the overpayment happened 10 years ago?
A: Statute of limitations is 6 years. If DFAS contacts you about debt >6 years old, respond with statute of limitations defense. Send certified letter citing 28 U.S.C. § 2415. Debt should be dismissed.
Q: Can I negotiate a lump sum settlement for less than full amount?
A: Sometimes. If you can pay 80-90% immediately, DFAS may accept to avoid collection costs. Not guaranteed, but worth proposing if you have cash available. Must make offer in writing with payment contingent on acceptance.
Q: Will my spouse's wages be garnished too?
A: No. DFAS can only garnish YOUR military pay. Cannot touch spouse's civilian income, joint bank accounts (unless commingled with your pay), or their tax refund (only yours).
Q: Can I file bankruptcy to eliminate DFAS debt?
A: No. Government debts (including DFAS overpayments) are NOT dischargeable in bankruptcy. Bankruptcy will not eliminate the debt—only delay collection temporarily.
Official Sources
- DoD Financial Management Regulation (FMR) Volume 5, Chapter 2: https://comptroller.defense.gov/FMR/fmrvolumes.aspx (Last verified: 2026-01-15)
- DFAS Debt Collection Homepage: https://www.dfas.mil/debtandclaims/ (Last verified: 2026-01-15)
- Treasury Offset Program: https://fiscal.treasury.gov/top/ (Last verified: 2026-01-15)
- DFAS Customer Service: 1-888-332-7411 (Mon-Fri 8am-5pm ET)
- MyPay (LES Access): https://mypay.dfas.mil (Last verified: 2026-01-15)
Legal Assistance:
- Base legal office (free for active duty)
- Military OneSource legal consultation (free, 1-800-342-9647)
Related Guides
- LES Discrepancy Escalation Guide - When finance office won't fix errors, escalation process to IG
- Finance Office Pay Disputes Guide - Getting pay errors corrected before they become debts
- Military Emergency Fund Guide - Building cash cushion to handle unexpected debt notices
- State of Residence Tax Optimization - Reducing tax burden to have more available for debt repayment
Need to audit your LES for errors? Use our LES Auditor tool (free scan) to catch overpayments BEFORE DFAS does. 70% of errors are preventable with monthly auditing.
Last updated: January 15, 2026. Garrison Ledger is an independent resource and is not affiliated with the Department of Defense. All information verified against official DoD FMR and DFAS guidance. Contact support@garrisonledger.com with corrections.