The VA has implemented changes to its procedures for reporting debt to consumer reporting agencies. The new rule, published February 2, revises the VA’s minimum requirements for reporting debt, provides opportunity for relief and helps Veterans who are experiencing financial hardship. These changes are particularly important now that the VA has resumed debt collection activities.

“Reporting debt to consumer reporting agencies impacts credit worthiness, and negative reports may cause financial distress for Veterans,” said VA Secretary Denis McDonough. “Late remittance or nonpayment can lead to debt collection. However, overpayment of benefits funds is often debt accrued through no fault of the Veteran.”

According to McDonough, the changes will result in a 99% reduction in unfavorable debt reported to consumer reporting agencies (CRA).

Under the previous rule, approximately 530,000 allowable VA debts were reported annually to CRAs, resulting in the referrals of some 60,000 delinquent VA debts to credit reporting agencies. 

The new amendments to the Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020 establish that the VA will not report to CRAs until all available collection efforts are exhausted and the specified debt is classified as not collectable. Additionally, the department will not report debts owed by Veterans determined to be catastrophically disabled and entitled to VA’s cost-free health care due to low income.

“This action…sets an important new standard to halt the financial distress many families face when medical debt unfairly hits their credit report,” said Consumer Financial Protection Bureau Director Rohit Chopra. “I expect that many in the health care industry will seek to follow Secretary McDonough’s lead to end the practice of forcing patients to pay up through aggressive credit report coercion.”

Relief options will continue for Veterans still experiencing financial distress. These options include repayment plans, waivers and temporary hardship suspensions. The VA will continue to report any debt incurred by individuals who have committed fraud, misrepresentation or bad faith.

Veterans and beneficiaries with questions regarding overpayments of benefits may reference frequently asked questions or call 800-827-0648. For questions about medical and pharmacy copayment debt, Veterans can contact the Health Resource Center at 866-400-1238.