United States Government Accountability Office

GAO Testimony 

Before the Committee on Government 

Reform, House of Representatives

MILITARY PAY

Military Debts Present 

Significant Hardships to 

Hundreds of Sick and 

Injured GWOT Soldiers 

Statement of Gregory D. Kutz, Managing Director 

Forensic Audits and Special Investigations 

For Release on Delivery

Expected at 10:00 a.m. EDT 

Thursday, April 27, 2006

 

GAO-06-657T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April, 27, 2006

MILITARY PAY:

Military Debts Present Significant 

Hardships to Sick and Injured GWOT 

Soldiers

Highlights of GAO-06-657T, a report to 

Committee on Government Reform, U.S. 

House of Representatives

In light of GAO’s past four reports

and testimonies on Army military

pay and travel pay for soldiers who 

have served in the Global War on

Terrorism (GWOT), GAO was 

asked to determine if weaknesses

in Army processes for initiating and 

terminating active duty pay might 

result in erroneous payments and 

debt, including (1) overpayments to 

soldiers in the Fort Bragg Medical

Retention Processing Unit

(MRPU)—1 of 23 MRPUs—and 

(2) overpayments and other errors 

that resulted in debt collection 

action against battle-injured 

soldiers who were released from 

active duty. GAO also was asked to

develop case studies to illustrate

the effects of these problems on

soldiers and their families and to 

determine ways that Congress 

could make the debt collection 

process more soldier friendly. 

What GAO Recommends

GAO’s report on overpayments at 

Fort Bragg (GAO-06-384R) 

recommended that DOD determine 

whether the same problems had 

occurred at the other 22 MRPUs 

and ensure that appropriate 

corrective action is taken. GAO’s

report on separated soldier debt 

(GAO-06-494) raised several

matters for Congress to consider

regarding legislation to provide

uniform debt relief to injured 

soldiers and exemptions from

credit bureau reporting and private 

collection agency action. DOD 

partially concurred on the Fort 

Bragg report and concurred on the 

soldier debt report. 

Continuing pay problems resulted in overpayments and debt for sick and 

injured Army soldiers serving in GWOT. As with GAO’s prior work, these pay 

problems resulted in significant frustration and financial problems for the 

soldiers and their families. Our audit of separated Army GWOT soldier debt 

identified nearly 1,300 separated battle-injured soldiers and soldiers who 

were killed in combat during the first 4 years of GWOT deployment who had 

incurred a total of $1.5 million in debt as of September 30, 2005. DOD has 

authority to write off debts of deceased soldiers and generally does not 

pursue collection action on the debts of soldiers who were killed in action. 

However, we found that hundreds of battle-injured soldiers were pursued for 

repayment of military debts through no fault of their own, including at least 

74 soldiers whose debts had been reported to credit bureaus and private

collection agencies at the time we initiated our audit in June 2005. Although 

the Debt Collection Act gives DOD authority to use these debt collection 

tools, in response to our audit, the Army temporarily suspended collection 

action on debts of battle-injured soldiers until a determination could be 

made about whether these soldiers’ debts were eligible for relief. In addition 

our investigation of pay problems related to Army National Guard and 

Reserve soldiers assigned to the Fort Bragg MRPU identified overpayments 

of approximately $218,000 related to 232 sick and injured soldiers. Many sick

and injured Fort Bragg soldiers faced garnishment of wages and other debt 

collection action resulting from their pay errors. The table below illustrates 

experiences of 3 case study soldiers. 

Case Study Examples on Impact of Injured Soldier Pay Problems Resulting in Debt 

Soldier Injury Debt Impact of debt on soldier and family 

Army 

Reserve 

Staff 

Sergeant 

Lost right 

leg below 

the knee $2,231 

This separated soldier spent 1-1/2 years on disputes and 

appeals before multiple debts and errors were resolved. 

Army debt, the only blot on the soldier’s credit report, 

prevented him from obtaining a loan to purchase a house. 

National 

Guard Staff 

Sergeant 

Brain 

damage 

and post

traumatic 

stress. $12,662 

Failure to record this soldier’s separation in the pay system 

resulted in forfeiture of 3 month’s pay while the Army 

attempted to recover his debt. As a result, the soldier’s 

utilities were turned off and his family was separated. 

National 

Guard 

Sergeant 

Vehicle 

injury

involving 

IED crater $2,050 

This Fort Bragg MRPU soldier’s hostile fire and hardship 

duty pay continued for about 6 months after he was 

processed into the MRPU. Pay deductions to recover 

military debt had a rippling effect on the soldier’s ability to 

pay other basic household expenses. 

Source: GAO analysis.

Congress recently gave the Department of Defense (DOD) authority to 

cancel some GWOT soldier debts. Because of restrictions in the law, debts 

of injured soldiers who separated at different times can be treated

differently, and soldiers who paid their debts are not eligible for refunds. 

Also, because this authority expires in December 2007, soldiers and their 

families could face bad credit reports and visits from collection agencies in 

the future. 

www.gao.gov/cgi-bin/getrpt?GAO-06-657T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Gregory D. 

Kutz at (202) 512-7455 or kutzg@gao.gov. 
Army GWOT Solider Debt

Mr. Chairman and Members of the Committee: 

Thank you for the opportunity to discuss our recent work on Army 

military pay. This testimony, which is the fifth in a series of reports and 

related testimonies to this committee, is part of a continuing body of work 

related to military and travel pay for soldiers who have served in the 

Global War on Terrorism (GWOT) since the terrorist attacks of September 

11, 2001. Our previous work1

 identified hundreds of Army National Guard 

and Reserve soldiers who experienced substantial pay and travel 

reimbursement problems caused primarily by ongoing challenges in the 

areas of human capital, processes, and automated systems. Our recent 

work, which is presented in two reports that the committee is releasing 

today,2

 presents two more examples of the overall result of a broken 

military pay system. 

Collection action on military debt has affected GWOT soldiers from all 

Army components—Active, National Guard, and Reserve—and involves 

soldiers who were injured or killed in combat as well as soldiers who 

suffered from sickness and nonbattle injuries. Our Fort Bragg investigation 

looked into allegations that there were overpayments made to sick and 

injured in-service soldiers who were in Medical Retention outpatient3

status. The Fort Bragg Medical Retention Processing Unit (MRPU) is 1 of 

23 Army MRPUs. Once overpayments are identified, they result in debt, 

which must be repaid to the government. Our audit of soldier debt focused 

on GWOT soldiers who were injured in battle and had separated from the 

 1

 GAO, Military Pay: Gaps in Pay and Benefits Create Financial Hardships for Injured 

Army National Guard and Reserve Soldiers, GAO-05-125 and GAO-05-322T (Washington,

D.C.: Feb. 17, 2005); Army National Guard: Inefficient, Error-Prone Process Results in

Travel Reimbursement Problems for Mobilized Soldiers, GAO-05-79 (Washington, D.C.:

Jan. 31, 2005) and GAO-05-400T (Washington, D.C.: Mar. 16, 2005); Military Pay: Army 

Reserve Soldiers Mobilized to Active Duty Experienced Significant Pay Problems, 

GAO-04-990T (Washington, D.C.: July 20, 2004) and GAO-04-911 (Washington, D.C.: Aug. 20, 

2004); and Military Pay: Army National Guard Personnel Mobilized to Active Duty

Experienced Significant Pay Problems, GAO-04-413T (Washington, D.C.: Jan. 28, 2004)

and GAO-04-89 (Washington, D.C.: Nov. 13, 2003). 

2

 GAO, Military Pay: Inadequate Controls for Stopping Overpayments of Hostile Fire and

Hardship Duty Pay to Over 200 Sick or Injured Army National Guard and Army 

Reserve Soldiers Assigned to Fort Bragg, GAO-06-384R (Washington, D.C.: Apr. 27, 2006)

and Military Pay: Hundreds of Battle-Injured GWOT Soldiers Have Struggled to Resolve 

Military Debts, GAO-06-494 (Washington, D.C.: Apr. 27, 2006). 

3

 For the purposes of this testimony, “outpatient” means soldiers who are being medically 

evaluated for specialized treatment. This may include surgery, which would require

hospitalization at a later date. 

Page 1 GAO-06-657T
Army GWOT Solider Debt

service and soldiers who were killed in combat and owed military debt 

related to overpayments and other errors. We performed our Fort Bragg 

investigation from August 2005 through March 2006 in accordance with 

quality standards for investigations established by the President’s Council

on Integrity and Efficiency. We performed our soldier debt audit from 

June 2005 through March 2006 in accordance with generally accepted 

government auditing standards. 

The Debt Collection Act of 19824

 provides a statutory basis for federal 

agencies to use appropriate debt collection tools, such as interest charges,

offset, and private collection agencies. Collection action on military debts 

consists of pay offset for soldiers who are still in the service and escalates 

to collection through debt notification letters, credit bureau reporting, and 

private collection agency action when soldiers have left the service and

have not paid their military debts. Debts of separated soldiers may also be 

collected through offsets against federal income tax refunds; retirement 

pay; and federally administered benefits payments, such as Social Security

Administration benefits. These offsets are handled by the Department of 

the Treasury Offset Program, referred to as TOP. 

Today, I will summarize the results of our recent work with respect to the 

(1) overpayments made to Army National Guard and Reserve soldiers at 

the MRPU at Fort Bragg and the extent and reported causes of debt for 

battle-injured Army soldiers who have left the service and (2) the effects of

overpayments and debt-related problems for case study soldiers and their 

families. Debt collection action presents the most serious hardships on 

injured soldiers who face physical limitations and continuing medical 

treatment. I will also discuss the Army’s actions to address pay and debt 

management problems and how current debt relief authority can be made

more soldier-friendly. 

Continuing pay problems resulted in overpayments and debt for sick and

injured Army soldiers serving in the GWOT. As shown in our prior work, 

these pay problems resulted in significant frustration and financial 

problems for the soldiers and their families. Our audit of separated Army 

GWOT soldier debt identified nearly 1,300 separated battle-injured soldiers 

and soldiers who were killed in combat who had incurred $1.5 million in 

debt during the first 4 years of the GWOT deployment (October 2001 

Summary 

 4

 Pub. L. No. 97-365, 96 Stat. 1749 (1982). 

Page 2 GAO-06-657T
Army GWOT Solider Debt

through September 2005).5 According to DOD, the primary cause of this 

debt related to military pay problems. As a policy, the Defense Finance 

and Accounting Service (DFAS) has authority to write off debts of soldiers 

who were killed in combat. However, according to DFAS officials, military 

debt can be satisfied from the final pay of these soldiers, 6

 and DFAS may 

pursue collection action on other deceased soldiers’ debts. 

We found that hundreds of battle-injured soldiers were pursued for 

repayment of military debts through no fault of their own, including at

least 74 soldiers whose debts had been reported to credit bureaus and 

private collection agencies at the time we initiated our audit in June 2005.

In response to our audit, Army and DFAS officials told us that they had

suspended collection action on these soldiers’ debts and recalled their 

reports to credit bureaus and their referrals to private collection agencies 

and TOP until a determination could be made as to whether these soldiers’ 

debts were eligible for relief. 

In addition, our investigation of pay problems related to Army National 

Guard and Reserve soldiers assigned to the MRPU at Fort Bragg—1 of 23

MRPUs—identified overpayments of approximately $218,0007 to 232 sick

and injured8

 Army National Guard and Reserve soldiers. Many sick and 

injured Fort Bragg soldiers faced garnishment of wages and other debt 

collection actions resulting from these pay errors. 

As illustrated by our case studies, debt collection action resulted in 

significant frustration and financial problems for soldiers and their 

families. For example, our Fort Bragg investigation found that several sick 

and injured soldiers who were still in the service experienced large, 

unexpected deductions—as much as $1,172 from a single paycheck—for 

repayment of debt resulting from the Army’s failure to stop hostile fire and

hardship duty pay for soldiers who were in Medical Retention status. The 

 5

 We determined that these data were reliable for the purposes of our audit. 

6

 Circumstances in which debt can be offset against a fallen soldier’s final pay include

normal adjustments to collect outstanding advance pay and minimal overpayments within 

the current month and other outstanding debt, such as nonsufficient fund checks. 

7

 As a result of the lack of supporting documents and data reliability concerns, we likely did 

not identify precise overpayment amounts. We have provided information on the 

overpayments we identified to cognizant Fort Bragg officials for further research to 

determine the proper amounts that are owed to the government or the soldiers. 

8

 The term injured includes battle-injured and non battle-injured soldiers. 

Page 3 GAO-06-657T
Army GWOT Solider Debt

longer it took the Fort Bragg Finance Battalion to stop the overpayments, 

the greater the amount of debt that accumulated for the soldier and the 

greater the financial impact since more money eventually would be 

withheld from the soldier’s pay or sought through debt collection action

after the soldier had separated from the service. 

Case studies related to both of our reports showed that sick and injured 

soldiers sometimes went months without paychecks9

 because debt caused

by overpayments of combat pay and other errors was offset against their 

military pay. Similarly, work performed for both of our reports also 

showed that when debts were not paid after the soldiers separated from 

the service, they were subject to credit bureau reporting and collection 

agency actions. Out-of-service debt collection actions created additional 

hardships on the soldiers by preventing them from getting loans to buy 

houses or automobiles or pay off other debt, and sending several of the 

soldiers into financial crisis. Some battle-injured soldiers forfeited their 

final separation pay to cover part of their military debt, and they left the 

service with no funds to cover immediate expenses while facing collection 

action on their remaining debt. Because of their lack of income, 16 of 19

separated battle-injured soldiers who contacted us during our audit told us 

that they had difficulty paying basic household expenses. Because they 

were unable to pay their military debts, 16 of these soldiers’ debts were 

reported to credit bureaus, 9 soldiers were pursued by collection agencies, 

and 8 soldiers had their income tax refunds withheld under TOP. 

Preventing debt from occurring in the first place is the best solution to this 

problem. Our past reports included over 80 recommendations for 

improvements in human capital, processes, and automated systems to 

address pay and travel problems. Although the fundamentally flawed, 

error-prone system remains, the Department of Defense (DOD) and the 

Army have taken a number of actions to address these problems and help 

prevent them from occurring in the future. These actions represent 

primarily human efforts and workarounds intended to compensate for the 

current system. For example, the Army and DFAS have created a 

Wounded-in-Action (WIA) database of personnel, payroll, and medical 

data on soldiers who became sick, were injured, or were killed in combat.

This database provides useful information for identifying and resolving 

soldier pay and debt problems. The Army and DFAS have also issued 

 9

 We found that after voluntary allotments and other required deductions, many times there

was no net pay due the soldier. 

Page 4 GAO-06-657T
Army GWOT Solider Debt

standard operating procedures and initiated training and oversight 

activities at several Army field locations. 

Our Fort Bragg report recommends that in conjunction with the Army’s 

proactive efforts to improve Army National Guard and Reserve pay 

account management, DOD and the Army follow up with finance offices 

supporting the 22 MRPUs that were not part of our investigation to 

determine the extent to which overpayments had occurred at these 

locations and ensure that appropriate corrective action is taken. 

Opportunities also exist to make the debt collection process more soldier 

friendly. Our report on debts of battle-injured soldiers raises a number of 

matters for congressional consideration with regard to expanding debt 

relief authority in current law, including providing uniform debt relief to 

injured GWOT soldiers and exempting these soldiers from credit bureau

reporting and private collection agency and TOP action. 

Continuing pay problems resulted in overpayments and debt for sick and

injured GWOT Army soldiers. When Army and medical unit commanders 

fail to report changes in soldier duty status and location, overpayments of 

combat-related pay, such as hostile fire pay, hardship duty pay, and family 

separation pay, continue—sometimes for several months past the time the

soldier is eligible to receive this combat-related pay. As illustrated by our 

case studies, which are discussed in the next section of our testimony, 

changes in duty status and location occur when soldiers become sick or 

injured or they do not deploy with their units and when soldiers are 

injured after deployment or sustain battle injuries and are medically 

evacuated. 

Continuing Pay 

Problems for Army 

Soldiers

Our investigation into allegations of pay problems related to 37 soldiers 

assigned to the MRPU at Fort Bragg identified actual overpayments of 

approximately $218,000 to 232 sick and injured Army National Guard and 

Reserve soldiers in outpatient status during the period April 2003 through

June 2005. These overpayments occurred in part because unit and medical

commanders failed to record changes in duty status and location of sick 

and injured soldiers. Data available during our case studies showed that it 

took from 14 to 203 days to stop overpayments once a soldier visited the 

Finance Battalion. As demonstrated in our past reports, finance offices in 

theater were often unable to start or stop hostile fire pay or hardship duty 

pay as required because of problems with human capital, processes, and 

the lack of integrated pay and personnel systems. When overpayments 

were not detected or they were not detected in a timely manner, the dollar 

Page 5 GAO-06-657T
Army GWOT Solider Debt

amount of soldier debts continued to increase. Debts that remained unpaid 

after these soldiers left the service were subject to collection through 

credit bureau reporting, private collection agencies, and TOP offsets of 

income tax refunds and other designated federal payments. 

Our audit of separated Army GWOT soldier debt identified nearly 1,300 

battle-injured soldiers who left the service owing $1.5 million, including 

almost 900 battle-injured soldiers whose debts totaled about $1.2 million 

and about 400 soldiers who died in battle whose debts totaled over 

$300,000. As a policy, DFAS does not pursue collection action on the debts

of fallen soldiers. However, Army and DFAS officials told us that under 

certain circumstances,10 military debt can be satisfied from the final pay of 

fallen soldiers. In addition, DFAS may pursue collection of debts of other 

deceased soldiers. We found that hundreds of separated battle-injured 

soldiers were pursued for repayment of military debts that occurred 

through no fault of their own, including 74 soldiers whose debts had been 

reported to credit bureaus, private collection agencies, and TOP at the 

time we initiated our audit in June 2005. Although the Debt Collection Act 

gives DOD authority to use these debt collection tools, in response to our 

audit, the Army temporarily suspended collection action on debts of 

battle-injured soldiers until a determination could be made about whether 

these soldiers’ debts were eligible for relief. 

As illustrated in figure 1, Army and DFAS data for fiscal years 2002 

through 2005 showed that 73 percent of the debts for the nearly 1,300 

separated battle-injured soldiers and soldiers killed in combat related to 

errors in pay calculations, combat pay errors, and erroneous leave

payments during fiscal years 2002 through 2005. The remaining 27 percent 

of these soldiers’ debts related to repayment of enlistment bonuses (11 

percent) where soldiers did not complete the required term of service or 

they improperly received more than one bonus; payments for tuition and

training (6 percent) where soldiers did not complete their training or they 

did not fulfill service requirements related to their training; and other 

expenses (8 percent) related to unpaid bills for family medical services, 

housing and household moves, insurance premiums, travel advances,11 and 

 10 Circumstances in which debt can be offset against a fallen soldier’s final pay include

normal adjustments to collect outstanding advance pay and minimal overpayments within 

the current month and other outstanding debt, such as nonsufficient fund checks. 

11 In accordance with 41 C.F.R. § 301-71.305 federal employees are required to account for

outstanding travel advances when they file travel claims. Any unused amount of a travel

advance is required to be repaid. 

Page 6 GAO-06-657T
Army GWOT Solider Debt

loss or damage of government property. The reasons for the remaining 

debt (2 percent) were not recorded in the Defense Debt Management 

System. 

Figure 1. Dollar Amounts of Battle-Injured and Fallen Soldier Debts by Major

Reason.

Other debts relate to provisions in law and DOD business rules in effect at 

various times. For example, until mid-2005, soldiers were required to repay 

portions of their enlistment bonus, special pay, and educational benefits 

and stipends when they failed to fulfill their required terms of service 

because of early separation as a result of their war injuries. According to 

DFAS officials, although unit commanders and finance offices are 

authorized to write off debts for lost and damaged equipment when 

soldiers who were injured or killed by hostile fire are medically evacuated 

from the theater of operation, they have not always done so. In addition, 

unpaid bills for family medical services, housing and household moves, 

insurance premiums, and outstanding travel advances generate debt. 

Because Army units and medical facilities have not always prepared or 

processed changes in orders when a soldier’s duty status or location 

changed, soldiers do not have the documentation needed to submit 

vouchers for travel reimbursement. The new WIA Support Team’s 

standard operating procedures for soldier pay account review require 

identification and processing of all soldier travel claims. 

Page 7 GAO-06-657T
Army GWOT Solider Debt

Debt collection actions have caused a variety of problems for injured and 

sick Army GWOT soldiers. Case studies related to both of our reports 

showed that sick and injured soldiers sometimes went months without 

paychecks because debt caused by overpayments of combat pay and other 

errors was offset against their military pay.12 Work performed for both of 

our reports also showed that when debts were not paid after the soldiers 

separated from the service, they were subject to credit bureau reporting 

and collection agency actions and offsets. Out-of-service debt collection

actions created additional hardships on the soldiers by preventing them 

from paying for basic household expenses, getting loans to buy houses or 

automobiles or pay off other debt, and sending several of the soldiers into 

financial crisis. Some battle-injured soldiers forfeited their final separation 

pay to cover part of their military debt, and they left the service with no 

funds to cover immediate expenses while facing collection action on their 

military debt. 

Overpayments and 

Debt Collection 

Action Have Placed 

Significant Hardship 

on Sick and Injured 

Soldiers and Their 

Families 

Fort Bragg Soldier Case 

Studies 

Case studies developed as part of our Fort Bragg investigation showed 

that some soldiers and their families had to expend significant time and 

effort dealing with pay problems and resulting debt while recovering from

sickness and injuries. Several soldiers experienced large, unexpected

deductions—as much as $1,172 from a single paycheck—for repayment of 

debt resulting from the Army’s failure to stop hostile fire and hardship 

duty pay for soldiers who were in Medical Retention status. 

As illustrated in table 1, for 9 of the 10 MRPU soldiers in our case studies, 

it took pay technicians at the Fort Bragg Finance Battalion from 14 to 203 

days to stop the overpayments once the soldiers visited the Finance 

Battalion. The resulting overpayments ranged from $553 to $2,300. The 

Finance Battalion could not provide documentation for us to determine 

the amount of time it took to stop overpayments for one of our case study 

soldiers. The soldiers’ injuries ranged from those inflicted by improvised 

explosive devices (IED) to post-traumatic stress disorder. 

 12 We found that after voluntary allotments and other required deductions, many times 

there was no net pay due the soldier. 

Page 8 GAO-06-657T
Army GWOT Solider Debt

Table 1. Examples of Fort Bragg Soldier Pay Problems 

Soldier Medical condition Arrival date Finance visit

Stop pay

transaction

date

Days elapsed

before 

appropriate

pay changea 

Estimated 

overpayments

(debt)b

#1 Sergeant, 

Army National 

Guard 

Injury from vehicle 

accident involving an 

IED crater. 

6/14/2004 6/14/2004 1/3/2005 203 $2,050

#2 Specialist, 

Army National 

Guard 

Knee injury, broken 

leg—undiagnosed for 

6 weeks. 

7/9/2004 7/15/2004 11/5/2004 113 $1,075

#3 Sergeant First 

Class, Army 

National Guard

Depression – sent to 

MRPU at Fort Bragg 

and redeployed to 

Iraq. 

7/1/2004 7/18/2004 11/3/2004 108 $1,300

#4 Specialist, 

Army Reserves 

Remained at Fort 

Bragg when his unit 

deployed to Iraq. 

7/12/2004 7/23/2004 12/14/2004 144 $848

#5 Sergeant Army 

National Guard

IED injuries to arm 

while in Iraq. 

6/29/2004 7/26/2004 12/23/2004 150 $2,000

#6 Staff Sergeant, 

Army National 

Guard 

Stroke—medically 

evacuated to 

Landstuhl and 

transferred to Walter 

Reed and Fort Bragg. 

7/6/2004 7/30/2004 11/5/2004 96 $1,300

#7 Specialist, 

Army National 

Guard 

Kidney disease in Iraq, 

hospitalized at 

Landstuhl, and then 

sent to Walter Reed 

and Fort Bragg. 

9/13/2004 9/15/2004 12/8/2004 82 $1,025

#8 Specialist, 

Army National 

Guard 

Depression and 

anxiety; never 

deployed. 

10/5/2004 10/13/2004 3/10/2004 148 $1,823

# 9 Lt. Colonel,

Army Reserves 

Experienced heart 

trouble in Iraq; sent to 

Fort Bragg. 

11/2/1004 11/4/2004 11/18/2004 14 $553

# 10 Lt. Colonel, 

Army Reserves 

Contracted 

legionnaire’s disease 

in Africa. 

3/8/2004 Unknown 9/2/2004 Unknown $2,300

Source: GAO.

a

Days elapsed equals the number of days between the date the soldier visited Finance and date 

ineligible pay was stopped. 

b

Estimated overpayments equals hostile fire and hardship duty payments made to a soldier after 

arrival at Fort Bragg MRPU. 

Soldier #6 in the table above, an Army National Guard soldier, suffered a 

stroke on June 26, 2004, while serving in Iraq. He was medically evacuated

Page 9 GAO-06-657T
Army GWOT Solider Debt

and arrived at Fort Bragg in early July 2004. Our investigation revealed 

that the soldier visited the Fort Bragg Finance Battalion on July 30, 2004, 

as part of his MRPU processing. Despite following MRPU procedures, this 

soldier’s hostile fire and hardship duty pay continued until November 5, 

2004—approximately 4 months after his initial visit to the Finance 

Battalion. By this time, the soldier’s overpayments had resulted in debt of 

$1,300. The Fort Bragg Finance Battalion eventually collected about $972 

of this amount from a single paycheck, which was about 50 percent of the 

soldier’s disposable pay. As a result, the soldier’s wife told us that she had 

to defer paying some of their bills, including the monthly payment on their 

second mortgage. 

Separated Battle-Injured 

Soldier Case Studies 

Case studies related to our audit of separated battle-injured soldier debt 

showed that several of these soldiers also had gone without a paycheck

for several months while they were in Army medical facilities undergoing 

treatment for their war injuries because debt caused by overpayments of 

combat pay and other errors was offset against their military pay. One 

soldier said he had no money for food while several soldiers told us they 

received assistance from family members. When these soldiers leave the 

Army, they generally do not have jobs and many of them face continuing 

medical treatment for battle injuries, making it difficult to hold a job. 

Some soldiers told us that their final separation pay was offset to cover 

their debt and they left the service with no funds to pay immediate 

expenses. 

Because of the lack of income, 16 of the 19 soldiers who contacted us 

during our audit told us that they had difficulty paying for basic household 

expenses. The Army’s failure to record separation paperwork in the pay 

system and other payment errors resulted in over $12,000 of debt for one 

severely battle-injured soldier who suffered brain damage when his 

convoy came under attack. Although the soldier’s family expected that he

would receive retirement pay when his active Army pay stopped upon his 

separation, the soldier had no income for several months while the Army 

attempted to recover his military debt. As a result the soldier’s family was 

unable to pay household bills, the utilities were shut off, and the soldier’s 

dependent daughter was sent out of state to live with relatives. 

In addition, three soldiers told us that they were erroneously identified as

absent without leave (AWOL) by their units while they were actually in the 

hospital or receiving outpatient care for their war injuries. The AWOL 

status for at least two of these soldiers created debt because it appeared

that the soldiers received pay when they were not in duty status. At the 

Page 10 GAO-06-657T
Army GWOT Solider Debt

time these soldiers were listed as AWOL by their Army units, they were 

actually receiving medical treatment. One soldier was receiving outpatient

therapy for her knee injury under the care and direction of an Air Force 

physician based on an Army medical referral and the other soldier was in a 

military hospital at Fort Campbell. Debt-related experiences of 19 

separated battle-injured soldiers who contacted us included the following. 

• Sixteen soldiers had their military debts reported to credit bureaus, 9 

soldiers had debts turned over to private collection agencies, and 8 

soldiers had their income tax refunds withheld under TOP. 

• Sixteen could not pay their basic household expenses. 

• Four soldiers were unable to obtain loans to purchase homes, meet 

other needs, or obtain VA educational benefits because of servicerelated debt on their credit reports. 

• At least 8 soldiers were owed travel reimbursements at the same time 

they were being pursued for collection of their service-related debts. 

Table 2 illustrates examples of the effects of debt collection actions on 

10 of our separated Army battle-injured case study soldiers and their 

families. Debts imposed the greatest hardship on battle-injured soldiers 

who have had to endure financial problems while they cope with 

adjusting to physical limitations caused by their injuries. 

Page 11 GAO-06-657T
Army GWOT Solider Debt

Table 2.Examples of Battle-Injured Soldier Pay Problems Resulting in Military Debt after Separation 

Soldier Type of Injury

Debt 

amount DOD-reported debt reason(s) Impact on soldiers and family members 

#1 Staff 

Sergeant, 

Army Reserves 

Lost right leg below 

the knee. 

$2,231 Payroll and leave payment 

errors. Also, erroneous 

Servicemen’s Group Life 

Insurance (SGLI) and Survivor

Benefit Program (SBP) 

premium billings. 

Soldier spent 1-1/2 years on disputes and 

appeals before multiple debts, errors and 

unreimbursed travel expense were resolved. 

Soldier said he deferred purchase of a 

house because of military debt included on

his credit report. The Army debt was the only

blot on the soldier’s credit report. 

#2 Staff 

Sergeant, 

Army National 

Guard 

Brain damage, in a 

coma for 3 months, 

and post traumatic 

stress disorder 

(PTSD). 

$12,662 Combat pay and calculation 

errors, including payment for 

unused leave. Soldier also was 

erroneously reported as AWOL

while actually receiving 

treatment in a Department of 

Veterans Affairs hospital. 

Family had no income while debt was 

recouped. According to a family member, 

the soldier’s utilities were turned off, and his 

young daughter was sent to live with 

relatives out of state. 

#3 Staff 

Sergeant, 

Active 

Component 

Paralyzed from waist 

down. 

$14,959 Combat pay and calculation 

errors. 

Soldier received reduced pay or no net pay 

over a 4-month period while he was at 

Walter Reed and his wife and four children 

were in Germany. The soldier separated

from the Army in January 2005 and his debt 

was not resolved until February 2006. The 

soldier is still pursuing underpayment of 

hostile fire pay and combat zone tax 

exclusion and “unreimbursed” travel 

expense. 

#4 Specialist, 

Army Reserves 

Inoperable shrapnel 

in knee. 

$1,575 Unearned portion of reserve 

enlistment bonus because of 

erroneous AWOL report and 

overpayment of hardship duty

pay. 

After the soldier struggled with her Army 

Reserve unit to resolve AWOL errors, she 

experienced collection action on other 

military debt. The soldier told us she was 

unable to get a $500 loan because of the 

past due Army debt of $1,079 on her credit 

report. 

#5 Sergeant 

Active 

Component 

Leg injury. $563 Outstanding travel advance 

error. 

Soldier was asked to travel to Fort Polk to 

brief Stryker Brigade on Iraq experience. He 

submitted his travel voucher several times, 

but DFAS lost it and reported a travel 

advance debt to credit bureaus. 

#6 Corporal, 

Active 

Component 

Chest injury, damage

to lung and left arm, 

in a coma for two 

weeks, and PTSD. 

$2,030 Combat pay and calculation 

errors. 

Soldier, a single parent with four young 

children, was told that DFAS would audit her

$2,030 debt. She said she never heard from 

DFAS and was unaware she owed a 

balance of over $500 until the debt appeared

on her credit report. 

Page 12 GAO-06-657T
Army GWOT Solider Debt

Soldier Type of Injury

Debt 

amount DOD-reported debt reason(s) Impact on soldiers and family members 

#7 Sergeant, 

Active 

Component 

Limited use of right 

leg. 

$6,472 Pay calculation errors. Soldier was contacted by a private collection

agency and his 2004 income tax refund was 

withheld to offset his debt. Soldier said he 

was unable to obtain a loan to buy land for 

his house trailer due to military debt on his 

credit report, and he had to pay a higher 

interest rate on his car loan. 

#8 Private First

Class, 

Army Reserve 

Shoulder injury. $3,716 Unearned portion of reserve 

enlistment bonus. 

Soldier said he was unsuccessful in gaining 

assistance from Fort Hood to resolve his 

debt. He was contacted by a private 

collection agency, and the government took 

his 2004 tax refund to offset the debt. 

#9 Staff 

Sergeant, Army 

National Guard

Nerve damage in

wrists and head and 

shoulder injury. $3,434 

Erroneous annual leave 

payment, repayment of basic 

training program expense. Also, 

erroneous SGLI premium 

billings. 

The soldier separated from the Army in 

October 2004 and said he received a check

for about $1,800 for unused leave 10 

months later in July 2005. He told us he 

received his first debt letter in November 

2005 but was unable to pay his debt. 

#10 Specialist, 

Active 

Component 

Loss of hearing and 

PTSD. 

$476 Pay calculation errors. Soldier said she was unable to obtain a loan

to purchase a house because of military 

debt on her credit report. The soldier would 

have had to pay a higher interest rate 

because of Army debt, and she could not 

afford the resulting higher monthly payment 

on the loan. 

Source: GAO.

Five soldiers and family members told us that they had contacted their 

unit finance offices multiple times for assistance in resolving their pay and

debt problems. However, the soldiers said that finance personnel either 

did not get back to them as promised or the finance personnel they spoke 

with said they could not help them with their problems. DFAS and Army 

officials we spoke with acknowledged that finance office personnel at 

some locations lacked the knowledge needed to accurately input 

transactions to soldier pay accounts. DFAS officials told us they recently 

initiated actions to train Army finance office personnel at several 

locations. 

Page 13 GAO-06-657T
Army GWOT Solider Debt

Our past reports included over 80 recommendations for improvements in 

human capital, processes, and systems to address pay and travel problems. 

Preventing these problems from occurring in the first place is the best 

solution. Efforts to fundamentally reengineer the current system into an 

integrated pay and personnel system have fallen far short of expectations.

DOD and the Army have taken a number of actions to improve human 

capital and correct process weaknesses. For example, the Army and DFAS 

have created a WIA database of personnel, payroll, and medical data on 

soldiers who were sick, injured, or killed in combat. This database 

provides useful information for identifying and resolving soldier pay and 

debt problems. The Army and DFAS have also issued standard operating 

procedures and initiated training and oversight activities at several Army 

field locations. In addition, the Army established a formal Ombudsman 

Office in May 2005 to assist Army Guard and Reserve soldiers in resolving 

a variety of pay and travel problems. Over the past few months, DFAS has 

deployed staff to several field locations to train the finance staff on the 

processing of pay transactions. Although these actions are positive, they 

primarily represent workarounds and substantial human efforts to 

overcome the error-prone, labor-intensive system that exists today. 

Our analysis of debt relief authority in the National Defense Authorization 

Act for Fiscal Year 2006 identified additional opportunities to alleviate the 

burden that military debt and collection action places on sick and injured 

soldiers. For example, the act could be clarified to make debt relief 

available to soldiers regardless of when they separated from active duty. 

Currently, soldiers who separated from the Army more than 1 year ago are 

not eligible to obtain debt relief, and soldiers who paid debts are not 

eligible for refunds. 

DOD Actions to 

Address Pay and 

Travel 

Reimbursement 

Problems 

Opportunities for a 

More Soldier-Friendly 

Debt Collection 

Process

Case studies included in both of our recent reports showed that some 

battle-injured soldiers did not receive debt notification letters until 8 to 10

months after they separated from the Army. One battle-injured soldier who 

separated in October 2004 told us that he received his debt notification 

letter in November 2005—more than 1 year after he separated from the 

Army. All but three of our case study battle-injured soldiers separated 

from the Army more than 1 year ago, and these soldiers’ eligibility for debt 

relief under the act has already expired. Another non-battle-injured soldier 

included in our Fort Bragg investigation who separated from the Army 

National Guard in June 2005, received his debt notification letter at the 

end of March 2006—10 months after he separated from the service—

stating that his debt would be reported to credit bureaus, if not paid within 

30 days and to private collection agencies if not paid within 60 days. 

Page 14 GAO-06-657T
Army GWOT Solider Debt

Further, the current debt relief authority is not permanent; it will expire on 

December 31, 2007. 

Our report on debts of battle-injured soldiers raises a number of matters 

for congressional consideration with regard to expanding debt relief 

authority in current law, including providing uniform debt relief to injured 

GWOT soldiers and exempting these soldiers from credit bureau reporting 

and private collection agency and TOP action. Our report on MRPU soldier 

overpayments recommends that DOD follow up with the 22 MRPUs that 

were not part of our investigation to determine the extent of overpayments 

at those locations and ensure appropriate corrective action is taken. 

Our most recent work shows that wounded soldiers continue to struggle 

with a broken pay system. These pay problems have resulted in significant 

frustration for injured soldiers and their families. In addition, we found 

instances of soldiers injured fighting the GWOT being referred to credit 

reporting agencies and collection agents. This is especially problematic for 

injured soldiers who are facing other difficult challenges. Although DOD 

has taken action to improve the military pay system, most of the progress 

to date represents workarounds and human efforts to overcome what 

remains today as a fundamentally flawed system. Absent a successful 

reengineering of the current pay system, problems for soldiers will 

continue. Consistent oversight by Congress will be needed to ensure that 

DOD provides our soldiers with the world class military pay system that 

they deserve.

Mr. Chairman and Members of the Committee, this concludes my 

statement. I would be pleased to answer any questions that you or other 

members of the committee may have at this time. 

For further information about this testimony, please contact Gregory D. 

Kutz at (202) 512-7455 or kutzg@gao.gov. Major contributors to this 

testimony include Gary Bianchi, Mary Ellen Chervenic, Dennis Fauber, 

Gayle Fischer, Jason Kelly, Renee McElveen, Richard Newbold, and John 

Ryan. Contact points for our Offices of Congressional Relations and Public

Affairs may be found on the last page of this testimony. 

Concluding 

Comments 

Contacts and 

Acknowledgments 

Page 15 GAO-06-657T (192205) 
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “Subscribe to Updates.” 

The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

PRINTED ON RECYCLED PAPER