United States Government Accountability Office

GAO Report to Congressional Requesters

MILITARY PAY 

Hundreds of 

Battle-Injured GWOT 

Soldiers Have 

Struggled to Resolve 

Military Debts 

April 2006 

 

GAO-06-494 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 2006

MILITARY PAY

Hundreds of Battle-Injured GWOT 

Soldiers Have Struggled to Resolve 

Military Debts 

Highlights of GAO-06-494, a report to 

congressional requesters 

As part of the Committee on

Government Reform’s continuing 

focus on pay and financial issues 

affecting Army soldiers deployed in 

the Global War on Terrorism 

(GWOT), the requesters were 

concerned that battle-injured

soldiers were not only battling the 

broken military pay system, but 

faced blemishes on their credit

reports and pursuit by collection

agencies from referrals of their 

Army debts. GAO was asked to

determine (1) the extent of debt of 

separated battle-injured soldiers 

and deceased Army soldiers who 

served in the GWOT, (2) the impact 

of DOD debt collection action on

separated battle-injured and 

deceased soldiers and their 

families, and (3) ways that

Congress could make the process 

for collecting these debts more 

soldier friendly.

What GAO Recommends

DOD concurred with GAO’s report. 

Matters that Congress should 

consider to make debt relief more

soldier friendly include

strengthening the DOD’s authority

to provide uniform debt relief to

injured GWOT soldiers and 

exempting these soldiers from 

credit bureau reporting and private 

collection agency and tax refund 

offset actions. 

Pay problems rooted in the complex, cumbersome processes used to pay 

Army soldiers from their initial mobilization through active duty deployment 

to demobilization have generated military debts. As of September 30, 2005,

nearly 1,300 separated Army GWOT soldiers who were injured or killed 

during combat in Iraq and Afghanistan had incurred over $1.5 million in 

military debt, including almost 900 battle-injured soldiers with debts of $1.2 

million and about 400 soldiers who died in combat with debts of $300,000. 

As a policy, DOD does not pursue collection of debts of soldiers who were 

killed in combat. However, hundreds of battle-injured soldiers experienced 

collection action on their debts. The extent of these debts may be greater 

due to incomplete reporting. GAO’s case studies of 19 battle-injured soldiers 

showed that collection action on military debts resulted in significant 

hardships to these soldiers and their families. For example, 16 of the 19 

soldiers were unable to pay their basic household expenses; 4 soldiers were 

unable to obtain loans to purchase a car or house or meet other needs; and 8 

soldiers’ debts were offset against their income tax refunds. In addition, 16 

of the 19 case study soldiers had their debts reported to credit bureaus and 9 

soldiers were contacted by private collection agencies. The table below 

illustrates the experience of 4 case study soldiers. 

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

Soldier Injury Debt Impact of Debt on Soldier and Family 

Army 

Reserve 

Staff Sgt. 

Lost right 

leg below 

the knee. 

$2,231 This 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 

Sgt. 

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. 

Active

Army

Staff Sgt. 

Paralyzed 

from the 

waist 

down. 

$14,959 This soldier received a reduced paycheck or no net pay 

during the last 4 months he was in the Army. He 

separated from the Army in January 2005 and his debt 

was not resolved until February 2006. 

Army

Reserve 

Specialist 

Inoperable 

shrapnel in 

knee. 

$1,575 This soldier was erroneously listed as absent without leave 

(AWOL) when she was actually being treated for her war 

injury. The AWOL error caused a pay-related debt. The 

soldier was unable to get a $500 loan to pay off her credit 

card balance due to Army debt on her credit report.

Source: GAO analysis.

Due to concerns about soldier indebtedness resulting from pay-related 

problems during deployments, Congress recently gave the Service 

Secretaries 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. For example, soldiers who separated more 

than 1 year ago are not eligible for debt relief and soldiers who paid their 

debts are not eligible for refunds. Further, because this authority expires in 

December 2007, injured soldiers and their families could face bad credit 

reports, visits from collection agents, and tax refund offsets in the future. 

www.gao.gov/cgi-bin/getrpt?GAO-06-494.

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. 
Contents 

Letter 1

Results in Brief 3 

The Army Has Referred Debts of Nearly 1,300 Battle-Injured

Soldiers for Collection, and the Number May Be Greater 6 

Debt Collection Action Has Placed Significant Hardship on Many 

Battle -Injured Soldiers and Their Families 12 

Opportunities Exist for Congress to Legislate a More SoldierFriendly Process for Collecting GWOT Debts 19 

Conclusions 20

Matters for Congressional Consideration 21 

Agency Comments and Our Evaluation 21 

Appendix I Background 23 

Appendix II Objectives, Scope, and Methodology 25 

Appendix III GAO Contact and Staff Acknowledgments 27 

Tables 

Table 1: Number and Dollar Amount of Military Debts Incurred by 

Separated Battle-Injured Soldiers and Fallen Army GWOT 

Soldiers by Fiscal Year 9 

Table 2: Number and Amount of Separated Battle-Injured Soldier 

and Fallen Soldier Debts by Army Component for Fiscal 

Years 2002 through 2005 9 

Table 3: Stratification of Separated Battle-Injured and Fallen 

Soldier Debts by Dollar Amount 10 

Table 4: Examples of Battle-Injured Soldier Pay Problems 

Resulting in Debt 14 

Figures 

Figure 1: Dollar Amount of Battle-Injured and Fallen Soldier Debts 

by Major Reason 11 

Figure 2: Out of-Service Debt Collection Process for WIA and 

Fallen Soldiers 24 

Page i GAO-06-494 Injured Soldier Debt
Abbreviations 

AWOL Absent without leave 

CFR Code of Federal Regulations 

DDMS Defense Debt Management System 

DFAS Defense Finance and Accounting Service 

DOD Department of Defense 

FMS Financial Management Service 

GWOT Global War on Terrorism

OEF Operation Enduring Freedom 

OIF Operation Iraqi Freedom

TOP Treasury Offset Program 

USC United States Code 

WIA Wounded-in-Action

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Page ii GAO-06-494 Injured Soldier Debt
United States Government Accountability Office

Washington, DC 20548 

April 27, 2006

The Honorable Tom Davis 

Chairman 

Committee on Government Reform 

House of Representatives 

The Honorable Christopher Shays 

Chairman 

Subcommittee on National Security,

 Emerging Threats and International Relations 

Committee on Government Reform 

House of Representatives 

The Honorable Christopher Shays 

Chairman 

Subcommittee on National Security,

 Emerging Threats and International Relations 

Committee on Government Reform 

House of Representatives 

The Honorable Todd Platts 

Chairman 

Subcommittee on Government Management, 

 Finance and Accountability 

Committee on Government Reform 

House of Representatives 

The Honorable Todd Platts 

Chairman 

Subcommittee on Government Management, 

 Finance and Accountability 

Committee on Government Reform 

House of Representatives 

The Honorable C. A. Dutch Ruppersberger 

House of Representatives 

The Army continues to mobilize tens of thousands of soldiers each year in

support of the Global War on Terrorism (GWOT). Thousands of soldiers 

have been injured or killed as a result of hostile fire since the initial 

deployments to Afghanistan and Iraq in October 2001. Battle-injured 

soldiers returning to the United States often face the daunting prospect of 

adjusting to their postwar lives. Many soldiers are faced with multiple 

surgeries and months of physical rehabilitation. Oftentimes, these soldiers 

have to reassess their career goals and seek training to accommodate their 

new physical limitations upon separation from military service. Because 

these battle-injured soldiers return to the United States before their unit’s

mobilization period ends, their duty status is not always appropriately 

updated and they encounter payroll problems related to the failure by the 

Army to adjust combat pay (entitlements such as hostile fire pay, hardship 

duty pay, and family separation pay). Our previous audits have detailed 

weaknesses in the Army’s systems and processes for providing servicerelated benefits to Army National Guard and Army Reserve soldiers that 

The Army continues to mobilize tens of thousands of soldiers each year in

support of the Global War on Terrorism (GWOT). Thousands of soldiers 

have been injured or killed as a result of hostile fire since the initial 

deployments to Afghanistan and Iraq in October 2001. Battle-injured 

soldiers returning to the United States often face the daunting prospect of 

adjusting to their postwar lives. Many soldiers are faced with multiple 

surgeries and months of physical rehabilitation. Oftentimes, these soldiers 

have to reassess their career goals and seek training to accommodate their 

new physical limitations upon separation from military service. Because 

these battle-injured soldiers return to the United States before their unit’s

mobilization period ends, their duty status is not always appropriately 

updated and they encounter payroll problems related to the failure by the 

Army to adjust combat pay (entitlements such as hostile fire pay, hardship 

duty pay, and family separation pay). Our previous audits have detailed 

weaknesses in the Army’s systems and processes for providing servicerelated benefits to Army National Guard and Army Reserve soldiers that 

Page 1 GAO-06-494 Injured Sol red Soldier Debt
have resulted in both over- and underpayments.1

 The Defense Finance and 

Accounting Service (DFAS) is responsible for collecting debts caused by 

overpayments and other pay-related problems. The Debt Collection Act of

19822

 provides a statutory basis for federal agencies to use appropriate 

debt collection tools, such as interest charges, offset, and private 

collection agencies. Thus, if debts are not paid before the soldier separates 

from military service, DFAS can refer these debts to collection agencies. A 

description of the collection process for separated soldier debts is 

included in appendix I. 

This report responds to your request that we determine (1) the extent to 

which Army GWOT battle-injured soldiers who were released from active 

duty or killed3

 in combat are having military debts referred to credit 

bureaus and collection agencies and (2) the impact of Department of 

Defense (DOD) debt collection action on these soldiers and their families. 

In addition, because of the added burden that debt collection places on 

separated battle-injured soldiers and fallen soldiers and their families, you 

asked us to discuss ways that Congress could make the process for 

collecting their debts more soldier friendly. 

To identify the extent of reported debts of separated battle-injured 

soldiers and fallen Army GWOT soldiers, we compared soldier records in 

the Army’s Wounded in Action (WIA) Program4

 databases, which contain

information on battle-injured and fallen GWOT soldiers who served in the 

 1

 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); 

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

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

3

 The Army refers to soldiers who were killed by hostile fire as fallen soldiers. 

4

 During February 2005, DFAS and the Army established the Wounded in Action Support

Team for WIA pay account management and initiated action to create a centrally managed 

corporate database, with decentralized pay account management. 

Page 2 GAO-06-494 Injured Soldier Debt
Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF) 

deployment from October 2001 through September 20055

 to DFAS Defense 

Debt Management System (DDMS) data on out-of-service debts.6

 We 

evaluated the reliability of the WIA databases and DDMS system data and 

found these data to be sufficiently reliable for the purposes of our work. 

To determine the effect of debt collection action on separated battleinjured soldiers and their families, we invited soldiers to contact us and 

discuss their experience with Army debts. We prepared case studies 

summarizing our interviews with soldiers or family members. Where we 

were unable to independently validate our case study information, we 

attributed it to the soldiers and family members. We based our discussion 

of ways in which the debt collection process can be made more soldier 

friendly on our previous Army pay and travel-related reports; our review of 

applicable laws and regulations and DOD and Army policies and 

procedures; discussions with key Army, DFAS, DOD, and Treasury 

officials; and our interviews of case study soldiers and their families. We 

conducted our work from June 2005 through March 2006 in accordance 

with generally accepted government auditing standards. A detailed 

discussion of our objectives, scope, and methodology is presented in 

appendix II.

Army and DFAS data as of September 30, 2005, showed that nearly 1,300

Army GWOT battle-injured soldiers who left the service or were killed in 

combat had military debts totaling $1.5 million during the first 4 years of 

the OIF/OEF deployment.

7

 Within this total, almost 900 battle-injured 

soldiers had debts totaling about $1.2 million and about 400 soldiers who 

died in battle had debts totaling over $300,000. The actual number of 

separated battle-injured soldiers and fallen soldiers reported for debt 

collection may be greater due to inaccurate or incomplete information on 

Results in Brief 

 5

 The Army’s WIA databases include pay account and medical status information on OEF

and OIF soldiers who were injured and killed in combat and soldiers who experienced 

disease and nonbattle injuries. 

6

 Out-of-service soldier debts occur when a soldier has separated from the service and is

not receiving salary or other payments from the department that can be offset to collect 

debt owed to a defense agency or military service. 

7

 As of September 30, 2005, the universe of soldiers in the WIA databases used for our

comparison to out-of-service debts totaled 11,142 soldiers, including 9,682 battle-injured 

soldiers and 1,460 soldiers who died as a result of combat injuries. 

Page 3 GAO-06-494 Injured Soldier Debt
these soldiers.8

 As a policy, DFAS does not pursue collection action on the 

debts of fallen soldiers. However, according to DFAS officials, military 

debt can be satisfied from the final pay of fallen soldiers,9

 and DFAS may 

pursue collection action on other deceased soldiers. DFAS records as of 

September 30, 2005, showed that of the $1.5 million in military service 

debts incurred by the nearly 1,300 battle-injured and fallen soldiers 

identified in our analysis, debts totaling almost $959,000 were written off, 

waived, or cancelled, including debts of fallen soldiers; debts totaling 

about $124,000 were paid; and debts totaling $420,000 remained open. 

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

for collection of military debts incurred through no fault of their own, 

including 74 soldiers whose debts had been reported to credit bureaus, 

private collection agencies, and the Treasury Offset Program (TOP) at the 

time we initiated our audit.10 Overpayment of pay and allowances 

(entitlements), pay calculation errors, and erroneous leave payments 

caused 73 percent of the reported debts. Remaining debts related to 

requirements to repay portions of enlistment bonuses and training due to

early separation and/or failure to fulfill requirements; unpaid expenses for 

medical services, household moves, insurance premiums, and travel 

advances;11 and lost or damaged military equipment. 

Debt collection actions have placed significant hardship on separated 

GWOT battle-injured soldiers and their families. When these soldiers leave 

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

 8

 As of September 30, 2005, there were some problems with unreported information on

battle-injured and fallen soldiers. In addition, the WIA databases of battle-injured and fallen 

soldiers contained some incomplete or incorrect information, including type of injury and 

social security numbers, which are key to identifying soldiers as battle injured and 

matching battle-injured and fallen soldier records to out-of-service debt. However, for 

purposes of our audit, we have concluded that the effect of these errors is not material. 

9

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

normal adjustments to collect outstanding advance pay, minimal overpayments within the 

current month, and other outstanding debt, such as debt related to non-sufficient fund

checks. 

10 Under TOP, delinquent out-of-service soldier debts may be offset against Internal 

Revenue Service tax refunds, federal retirement payments, or specific approved federal 

benefit payments due to the debtor, such as Social Security Administration benefits

payments. 

11 In accordance with § 301-71.305, Federal Travel Regulations, federal employees are 

required to account for outstanding travel advances when they file a travel claim. Any 

unused amount of a travel advance is required to be repaid. 

Page 4 GAO-06-494 Injured Soldier Debt
continuing medical treatment for battle injuries, making it difficult to hold 

a job. Our case studies showed that 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. Due to their lack of income, 16 

of our 19 case study soldiers told us that they had difficulty paying for 

basic household expenses. For example, 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. 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 listed as absent without leave (AWOL) by their units 

while they actually were 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 while they 

were not in duty status when, in fact, the soldiers were receiving medical

treatment for their war injuries. When these soldiers did not respond to 

formal debt notification or pay their debts, many of their debts were 

reported to credit bureaus, private collection agencies, and TOP. 

There are two primary mechanisms in law to forgive soldier debt, 

including (1) authority to waive debts that result from payroll, travel, and 

other payment and allowance errors12 and (2) authority for remission 

(forgiveness) of debts involving issues of hardship or fairness.13 The Fiscal

Year 2006 National Defense Authorization Act14 broadened remission 

authority to include debts of officers and any soldiers no longer on active 

duty for up to 1 year. However, the remission authority in the act does not 

cover soldiers who were released from active duty more than 1 year ago 

and the waiver authority does not cover cancellation of debts due to error 

after the applicable 3-year statute of limitations. As a result, the debt relief 

provisions in the act do not apply to debts of battle-injured soldiers who 

separated from the service during fiscal years 2002 through at least the 

 12 10 U.S.C. § 2774 and 32 U.S.C. § 716. 

13 10 U.S.C. §§ 4837, 6161, and 9837. 

14 Pub. L. No. 109-163, § 683, 119 Stat. 3136, 3322 (2006). 

Page 5 GAO-06-494 Injured Soldier Debt
first part of fiscal year 2005. In addition, the debt relief provisions in the 

2006 authorization act do not contain a provision granting the Service 

Secretaries authority to refund any amount of indebtedness previously 

paid by the soldier. Further, the expanded authority under the act will 

terminate in December 2007, thereby making it possible that some battleinjured and fallen soldier debts may be subject to collection through credit

bureau reporting and private collection agency and TOP actions in the 

future. 

Our past reports included over 80 recommendations to address Army 

payroll problems, including timely recording of changes in soldier duty 

status and processing related payroll changes. The Army and DFAS have 

taken a number of actions to address these problems and help prevent 

them from occurring in the future. Correcting these problems, many of 

which cause service-related debt, is the best solution to pay-related debt

problems and thus, we are making no new recommendations in this 

report. DOD concurred with our report. This report also presents several 

matters for congressional consideration if Congress wishes to make the 

process for collecting military debts more soldier friendly and help ensure 

that debt relief for injured GWOT soldiers is handled equitably. 

Our analysis of Army and DFAS data through the end of fiscal year 2005

identified nearly 1,300 separated battle-injured soldiers15 and soldiers who 

were killed in combat who had military debts totaling $1.5 million that 

were reported to DFAS for debt collection action. Of the nearly 1,300 

soldiers, almost 900 separated battle-injured soldiers had debts totaling 

about $1.2 million and about 400 soldiers who died in combat had debts 

totaling over $300,000. The actual number of separated battle-injured 

soldiers and fallen soldiers who owed military debts may be greater due to

incomplete and inaccurate reporting of some information to the WIA 

databases.16 Overpayment of pay and allowances (entitlements), pay 

calculation errors, and erroneous leave payments caused 73 percent of the

reported debts. Remaining debts related to requirements to repay portions 

of enlistment bonuses and training due to early separation and/or failure to

The Army Has 

Referred Debts of 

Nearly 1,300 BattleInjured Soldiers for 

Collection, and the 

Number May Be

Greater 

 15 As of September 30, 2005, the universe of soldiers in the WIA databases used for our 

comparison to out-of-service debts totaled 11,142 soldiers, including 9,682 battle-injured 

soldiers and 1,460 soldiers who died as a result of combat injuries. 

16 The Army’s WIA databases capture data on all injured, sick, and deceased GWOT soldiers

for pay and debt account management purposes. 

Page 6 GAO-06-494 Injured Soldier Debt
fulfill requirements; unpaid expenses for medical services, household 

moves, insurance premiums, and travel advances; and lost military 

equipment. 

Because the Army lacks a centralized automated system that integrates 

payroll, personnel, and medical data on its soldiers, the Army and DFAS 

formed a Wounded in Action Support Team and created WIA databases 

that included soldier personnel, payroll, and medical information using 

weekly data calls from five separate Army systems.17 The Army and DFAS 

are using ad hoc work-around processes to research, verify, and correct 

incomplete and inaccurate data. These labor-intensive, manual procedures 

are necessary due to continuing, uncorrected weaknesses in Army 

personnel and payroll systems and the growing number of battle-injured

soldiers whose pay accounts need to be researched and verified to 

determine whether overpayments or other problems have resulted in debt. 

As a policy, DFAS does not pursue collection of debts of fallen soldiers. 

However, DFAS officials told us that military debt may be satisfied from 

the final pay and allowances of fallen soldiers18 and DFAS may pursue 

collection of debts of other deceased soldiers. During the past 2 fiscal 

years, the Army pursued hundreds of battle-injured soldiers for collection 

of their military debts after they left the service. Collection action begins 

with monthly debt notification letters and escalates to credit bureau 

reporting and private collection agency and TOP action when there is no 

response or debts are not paid. 

The Army Has Reported 

Debts of Battle-Injured 

GWOT Soldiers to Credit 

Bureaus and Private 

Collection Agencies 

At the time we initiated our audit in June 2005, the Army was taking 

collection action on active debts of over 300 battle-injured soldiers. Our 

initial analysis of Army and DFAS data as of June 30, 2005, identified 331 

battle-injured soldiers, whose military service debts were undergoing 

collection action, including at least 74 soldiers whose military debts had 

been reported to credit bureaus and to private collection agencies and

TOP. However, in response to our audit, Army and DFAS officials told us 

that they had suspended collection action on these soldiers’ debts and 

 17 The five Army systems are the Joint Personnel Tracking and Accountability, Patient 

Accountability Real-time Reporting Tracking, Medical Operational Data System, Patient 

Tracking Module, and Electronic Military Personnel Office systems. 

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

normal adjustments to collect outstanding advance pay, minimal overpayments within the 

current month, and other outstanding debt, such as debt related to non-sufficient fund

checks. 

Page 7 GAO-06-494 Injured Soldier Debt
recalled their reports to credit bureaus and their referrals to the 

Department of the Treasury for private collection agency and TOP 

collection action until a determination could be made as to whether these 

soldiers’ debts were eligible for relief.

We independently confirmed the recall of credit bureau reporting and 

Treasury referrals with those entities. DFAS records as of September 30, 

2005, showed that of the $1.5 million in military service debts incurred by 

the nearly 1,300 battle-injured and fallen soldiers identified in our analysis,

debts totaling almost $959,000 were written off, waived, or cancelled, 

including debts of fallen soldiers; debts totaling about $124,000 were paid; 

and debts totaling $420,000 remained open. In addition, at the end of our 

audit, the Army and DFAS advised us that waivers had been approved for 

active debts of 202 of the 331 separated battle-injured soldiers’ debts that 

were being pursued for collection when we initiated our audit in June 

2005. 

The Number and Dollar 

Amount of Separated 

Battle-Injured Soldier and 

Fallen Soldier Debts 

Increased from Fiscal 

Years 2002 through 2005 

While many soldiers had only one or two debts, other soldiers had three or

more debts. The nearly 1,300 separated battle-injured soldiers and fallen 

soldiers identified in our analysis had a total of 2,324 debts. Debts for 

these soldiers grew from 404 debts totaling $128,230 at the end of fiscal

year 2002 to 2,324 debts totaling over $1.5 million at the end of fiscal year 

2005. 

As shown in table 1, the number of debts generally has increased each 

fiscal year as more soldiers have been deployed and Army payroll 

problems remained unresolved. More than 40 percent of these soldier 

debts totaling over half of the $1.5 million were incurred during fiscal year 

2005. 

Page 8 GAO-06-494 Injured Soldier Debt
Table 1: Number and Dollar Amount of Military Debts Incurred by Separated BattleInjured Soldiers and Fallen Army GWOT Soldiers by Fiscal Year

Fiscal 

year 

Number of 

debts

Percentage

of debts

Original debt 

amount 

Percentage

of total amount

2002 404 17 $128,230 8

2003 279 12 139,689 9

2004 640 28 384,006 26

2005 1,001 43 850,685 57

Total 2,324 100 $1,502,610 100

Source: GAO analysis.

Previously, we reported that most soldier payroll problems related to 

Army National Guard and Army Reserve soldiers. Our analysis of military 

service debts of the nearly 1,300 separated Army battle-injured soldiers 

and fallen soldiers showed that for the first 4 years of the GWOT 

deployment, 661 (51 percent) of the debts related to active component 

Army soldiers, 346 (about 27 percent) of the debts related to Army 

National Guard soldiers, and 248 (about 19 percent) of the debts related to

Army Reserve soldiers. The field units that reported debts for the 

remaining 35 Army soldiers (about 3 percent) did not identify these 

soldiers by component. Table 2 shows the relative number and amount of 

debts by component. 

Table 2: Number and Amount of Separated Battle-Injured Soldier and Fallen Soldier 

Debts by Army Component for Fiscal Years 2002 through 2005 

Army 

component 

Number of 

soldiers

Percentage

 of soldiers 

Original debt 

amount

Percentage

of debt 

Active Army 661 51 $ 869,140 58

National Guard 346 27 295,461 19

Army Reserves 248 19 236,799 16

Unidentified 35 3 101,210 7

Total 1,290 100 $1,502,610 100

Source: GAO analysis.

Page 9 GAO-06-494 Injured Soldier Debt
Because Congress passed legislation19 that permitted the Secretary of 

Defense to cancel up to $2,500 in individual soldier debt during Desert 

Shield/Desert Storm, your offices asked us to determine the dollar amount 

of debts of separated battle-injured and fallen soldiers by incremental 

thresholds. Our analysis of the amounts of debt reported for separated 

battle-injured soldiers and fallen soldiers who served in OIF and OEF 

during fiscal years 2002 through 2005 showed that about 82 percent of 

these soldiers had debts that totaled $1,500 or less and the vast majority, 

about 90 percent of the soldiers, had debts that totaled $2,500 or less. 

While making this comparison, it is appropriate that debt relief is 

adjudicated prudently in consideration of individual circumstances. Table 

3 shows the stratification of battle-injured and fallen soldier debt in $500 

increments up to $3,500 and total amounts over $3,500. 

Table 3: Stratification of Separated Battle-Injured and Fallen Soldier Debts by Dollar 

Amount 

Dollar range of soldier 

debts

Number of 

soldiers

Cumulative percentage

of soldiers

$ 1 - $500 763 a 59 a

$501 - $1,000 190 74 

$1,001 - $1,500 108 82

$1,501 - $2,000 45 86

$2,001 - $2,500 49 90

$2,501 - $3,000 30 92

$3,001 - $3,500 15 93

Over $3,500 90 7

Total 1,290 100

Source: GAO.

a

Under the $225 collection threshold, 526 of the 763 soldiers (41 percent) had debts that were subject 

to write-off. 

Ninety soldiers had debts that totaled more than $3,500, including original

soldier debts that ranged from $3,528 to $34,124. Sixty-seven of these 

soldiers had debts that totaled less than $10,000, 16 soldiers had debts 

totaling between $10,000 and $20,000, and 7 soldiers had debts that totaled 

more than $20,000. 

 19 Department of Defense Appropriation Act, Pub. L. No. 102-172, § 8138, 105 Stat. 1150, 

1212 (1991). 

Page 10 GAO-06-494 Injured Soldier Debt
Consistent with our case studies, which are discussed in the next section,

DOD data showed that most of the debts of the nearly 1,300 soldiers who 

were injured or killed in combat related to errors in pay calculations and 

overpayment of combat pay entitlements and erroneous payments for 

unused leave. 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 fallen soldiers related to errors 

in pay calculations, entitlement 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 medical services, housing 

and household moves, insurance premiums, travel advances,20 and loss or 

damage of government property. The reasons for the remaining debt (2 

percent) were not recorded in DDMS. 

Most Military Debts Relate 

to Pay Errors 

Figure 1: Dollar Amount of Battle-Injured and Fallen Soldier Debts by Major Reason 

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

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

advance is required to be repaid. 

Page 11 GAO-06-494 Injured Soldier Debt
According to DFAS officials, while 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, 

because Army units and medical facilities have not always prepared or 

processed changes in orders when soldier duty status changed, soldiers do 

not have required documentation needed to submit a voucher for travel 

reimbursement. Because the travel system is not integrated with the 

payroll and debt management systems, neither DFAS nor the Army could 

tell us the amount of soldier debt that could potentially be offset by travel

reimbursements owed to soldiers. The new WIA Support Team’s standard 

operating procedures for soldier pay account review require identification

and processing of all soldier travel claims. 

Debt collection actions have caused a variety of problems for separated 

GWOT battle-injured soldiers. 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. If these 

soldiers have military debt that has been identified, their final separation 

pay may be offset to cover the debt and they may leave the service with no

funds to pay immediate expenses. Due to the lack of income, 16 of the 19 

soldiers we interviewed told us that they had difficulty paying for basic 

household expenses. In addition, 3 soldiers told us that they were 

erroneously identified as 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 2 of these soldiers created debt because it appeared that

the soldiers received pay when they were not in duty status. At the 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 battleinjured soldiers who contacted us included the following. 

Debt Collection 

Action Has Placed 

Significant Hardship 

on Many Battle -

Injured Soldiers and 

Their Families 

• 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 a home, meet other 

needs, or obtain VA educational benefits due to service-related debt on 

their credit reports. 

Page 12 GAO-06-494 Injured Soldier Debt
• At least 8 soldiers were owed travel reimbursements at the same time they 

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

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. Although the soldier’s family expected that he would 

receive retirement pay when his 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, his 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, although

the soldier had been receiving treatment at an Army medical center and a

VA polytrauma center over a 5-month period, the day the soldier was 

released to go home, his Army unit called his wife to ask why he was not 

reporting for duty—an indication that his Army unit had considered him to 

be AWOL. 

Table 4 illustrates examples of the effects of debt collection actions on 

selected separated Army battle-injured soldiers and their families based on 

our case studies. 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 finance office personnel at 

several locations. Debts imposed the greatest hardship on battle-injured 

soldiers who have had to endure financial problems while they cope with 

adjusting to physical limitations due to their injuries. 

Page 13 GAO-06-494 Injured Soldier Debt
Table 4: Examples of Battle-Injured Soldier Pay Problems Resulting in Debt

Soldier Type of injury Debt amount 

DOD-reported debt 

reason(s) 

Impact on soldiers and family 

members 

#1 Staff Sergeant, 

Army Reserve 

Lost right leg, below 

the knee. 

$2,231 Payroll and leave payment 

errors. Soldier also had 

erroneous Servicemen’s 

Group Life Insurance 

(SGLI) and Survivor Benefit 

Program (SBP) premium 

billings. 

Soldier spent 1-1/2 years on disputes 

and appeals after leaving the service 

before multiple debts, errors, and 

unreimbursed travel expense were 

resolved. Soldier said he deferred 

purchase of a house due to 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 Pay and entitlement errors, 

including payment for 

unused leave. Soldier also 

was erroneously listed as 

AWOL while actually 

receiving treatment in a VA 

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 the 

waist down. 

$14,959 Pay and entitlement 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 

due to 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 her military debt 

stayed 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 2 weeks, 

and PTSD. 

$2,030 Pay and entitlement 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 them and was 

unaware she owed a balance of over 

$500 until the debt appeared on her 

credit report. 

Page 14 GAO-06-494 Injured Soldier Debt
Soldier Type of injury Debt amount 

DOD-reported debt 

reason(s) 

Impact on soldiers and family 

members 

#7 Sergeant, 

Active Component 

Leg injury from mortar, 

shrapnel and gun shot 

wounds. 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 Ft. 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. Soldier also had 

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 due to 

military debt on her credit report. The 

soldier would have had to pay a higher 

interest rate due to Army debt, and she 

could not afford the resulting higher 

monthly payment on the loan.

Source: GAO.

The following case summaries provide additional details of selected

soldier debt experiences. The first soldier, case study #1, battled for 1-1/2 

years after he separated from the service to resolve his debts and obtain a

reimbursement related to travel expense during his deployment. 

Page 15 GAO-06-494 Injured Soldier Debt
Soldier Engages in 1-1/2 Year Battle to Resolve Debts 

An Army Reserve Staff Sergeant who lost his leg in a roadside bomb explosion near the 

town of Ramadi, Iraq, on July 14, 2003, found himself involved in a lengthy effort to 

resolve pay-related debts after he separated from the Army in August 2004. The 

Sergeant’s Army debt was the only unpaid debt on his credit report. The first problem 

occurred in August 2004, when the Army failed to terminate the soldier’s active duty pay 

after he separated from military service, resulting in an overpayment of $2,728. Because 

the soldier was still owed his final separation pay of $2,230, this amount was used to 

offset his debt, reducing it to $498. The Army also incorrectly billed the soldier for several

months of Servicemen’s Group Life Insurance (SGLI) premiums, which should have 

ceased when the soldier left the service. In attempting to correct the SGLI billings, the 

soldier’s account was mistakenly reactivated in the pay system because a Fort Belvoir 

finance clerk did not know how to handle this transaction. As a result, the system then 

generated an erroneous pay check to the soldier totaling $1,733, increasing his debt to 

$2,231. According to the soldier, around the same time, in January 2005, an Army 

headquarters official contacted him to say his debt had been resolved, leading the soldier

to believe that the $1,733 payment was the result of his pay audit and possibly included 

his unpaid travel reimbursement. However, shortly thereafter, the soldier began receiving 

debt collection letters from DFAS for the $2,231 debt, which also appeared on his credit 

report. The soldier appealed this debt and requested a waiver, but was turned down due 

to a ruling that he should have known that he was not entitled to another pay check once 

he had been out of the service for 4 months. Because lenders view unpaid federal debts

as a significant problem, the soldier and his wife decided to forego applying for a loan to 

purchase a house until his Army debt was resolved. 

According to DFAS officials, it took about 6 months to research changes in the soldier’s 

duty status and pay the soldier’s travel reimbursement. Because the soldier had not been 

issued any orders after his initial deployment, DFAS had to work with the Army to prepare 

and backdate military orders for each change of status from the time the soldier was 

medically evacuated to Landstuhl Regional Medical Center in Germany, transferred to 

Walter Reed Army Medical Center, in Washington, D.C., and entered into the Medical 

Retention Program. In addition, we learned that the soldier also received erroneous 

monthly billings for Survivor Benefit Program (SBP) premiums—even though he and his

wife had declined participation in writing, as required, when he separated.21 The monthly 

SBP billings continued because Walter Reed had not forwarded the soldier’s paperwork to

the SBP program office at DFAS Cleveland. In December 2005, the soldier’s second, 

more detailed request for debt waiver was accepted. In addition, his travel voucher was 

approved and he received his contingency travel reimbursement of $2,727—an amount 

that exceeded his debt by almost $500. However, the soldier’s SBP program election was

not properly canceled because a change was made to only one of two codes that needed

to be changed in the system. As a result, the soldier’s final debt was not corrected until 

February 2006—1-1/2 years after he separated. 

 21 Pursuant to 10 U.S.C. § 1448, SBP is a mandatory program unless both the soldier and 

his/her spouse, after being fully briefed on the program, decline participation in writing. 

Page 16 GAO-06-494 Injured Soldier Debt
Case study #2 involved a seriously injured Army National Guard soldier 

who went without pay for several months when his separation paperwork 

was not entered in the pay and personnel systems. 

Brain-Damaged Soldier Goes without Pay Due to Error 

This Army National Guard Staff Sergeant was injured 3 months after being deployed to 

Iraq, when his Humvee was hit by another truck during an attack on December 11, 2004.

The soldier suffered a crushed jaw and severe head injuries, resulting in permanent brain

damage. The soldier was sent to Walter Reed Army Medical Center in Washington, D.C., 

where he remained in a coma for over 3 months. On March 28, 2005, he was transferred 

to the Richmond VA Medical Center for care in their polytrauma rehabilitation center. On

April 28, 2005, the soldier was sent home on convalescent leave before he returned to 

Walter Reed for further surgery. The soldier was released to go home in May 2005, 

pending separation from the service. On the day he was released from Walter Reed and 

sent home, the soldier’s wife got a call from his Army unit asking why her husband was 

not reporting to active duty—an indication that the soldier’s unit believed him to be AWOL. 

Although the soldier had been through medical board evaluations and was supposed to be

retired effective July 23, 2005, his separation paperwork was not entered in the pay and 

personnel systems. The soldier was rated 80 percent disabled and his family expected to 

receive disability benefit income of over $3,000 per month. When the sergeant suddenly 

received no income in October 2005, he learned that he owed the Army a debt of $6,400 

and that the paperwork to start his disability benefits had not been processed. About this 

time, a finance clerk noted that the sergeant had not been paid for his unused leave. 

Because the finance clerk did not know how to post the leave payment transaction, the 

clerk put the soldier back on active duty, resulting in an additional overpayment of $6,101, 

and increasing his debt to $12,501. According to a family member, the soldier’s family was 

without income and could not pay for basic household expenses. As a result, the family’s

utilities were cut off and the soldier’s 11-year-old daughter was sent out of state to live 

with relatives. After receiving a call from the soldier’s family member in mid-October 2005, 

we alerted Army headquarters to the soldier’s debt pay and debt problems. The Army took 

immediate action to research the soldier’s pay account. On January 25, 2006, DOD 

approved a waiver of $12,662 debt, and DFAS refunded $2,355 in debt previously 

withheld from the soldier’s pay. 

An Army Reserve soldier, case study #4, was faced with debt due to an 

erroneous AWOL report while she was receiving treatment at a private

health facility under direction of an Air Force physician. 

Soldier Finds Debt Is Due to Erroneous AWOL Report During Rehabilitation 

An Army Reserve Specialist was injured during a mortar attack on the outskirts of 

Baghdad on March 23, 2003, and was awarded a Purple Heart. The soldier underwent a 

total of six surgeries at a field hospital and military hospitals in Kuwait, Spain, and 

Germany—none of which were successful in removing shrapnel from her knee. She was 

then flown to a military hospital in Baltimore, Maryland, and in early April 2003, she was 

sent to a military hospital at Keesler Air Force Base, in Biloxi, Mississippi, for treatment. At 

Keesler, the soldier was given the choice of receiving rehabilitative treatment at the 

Keesler medical facility or at a rehabilitation center near her home in Leakesville, 

Mississippi. There were no Army facilities near Keesler, and the soldier was told she 

Page 17 GAO-06-494 Injured Soldier Debt
would have to rent an apartment nearby and pay for it herself. As a result, the soldier 

decided to return home to begin her rehabilitation sessions at a private facility approved 

by Keesler. The soldier was required to travel to the Keesler AFB Orthopedic Center (a 2-

hour round trip) every 2 weeks to be examined by the referring Air Force physician. The 

soldier told us the Air Force doctor released her in July 2003, noting that she had 

completed her rehabilitation treatment. The soldier was medically discharged from her 

Army Reserve unit on November 18, 2003. 

The soldier learned she had a military debt of $1,575, including $975 related to a 

requirement to repay the unearned portion of her enlistment bonus when a collection 

agent contacted her in January 2004—2 months after she had separated from the Army. 

As a result of this contact, the soldier learned that her Army unit had lost track of her and

had reported her as AWOL while she was being treated for her battle injuries. However, 

the soldier told us that in April 2003, when she arrived at Keesler, she had made several 

unsuccessful attempts to let her unit Sergeant know her duty status and whereabouts. 

When her calls were returned in July 2003, she was told to report to Fort Stewart, 

Georgia, and to remain there until her unit returned from Iraq and was demobilized. The 

soldier told us she did as ordered and was placed in Medical Hold status at Fort Stewart. 

Although the soldier told us she traveled to her unit in Brookhaven, Mississippi, on two 

occasions in an effort to document that she was not AWOL because she was at an 

approved medical facility during the time in question, she was unsuccessful because the

collection agent continued to call her. As of the end of July 2004, DFAS records showed 

the soldier’s debt totaled $1,575, including $975 related to the unearned portion of her 

enlistment bonus and $600 in overpayment of her hardship duty pay. Although DFAS had 

recalled this debt from the soldier’s credit report in July 2005, as of October 2005 this debt

still showed on her credit report. We confirmed that DFAS recalled the debt from the 

soldier’s credit report a second time. However, in March 2006, the debt reappeared on the 

soldier’s credit report. The soldier told us that she was unable to get a loan for $500 to pay 

off her credit card balance because the military debt kept showing up on her credit report. 

At the end of our field work, the Army advised that the reappearance of military debt on 

the soldier’s credit report was due to errors made by both DFAS and the credit bureau. 

Our past four reports22 have discussed numerous problems related to Army 

pay and travel reimbursements and made over 80 recommendations for 

correcting weaknesses in human capital, processes, and systems that 

caused these problems. Effective action to address pay and travel 

reimbursement problems will also help prevent the occurrence of military 

debts. 

 22 See footnote 1.

Page 18 GAO-06-494 Injured Soldier Debt
As a result of concern regarding the indebtedness of soldiers resulting 

from pay-related problems during deployments, Congress on occasion has 

provided authority to the Secretary of Defense to cancel such debts. For 

example, in the Department of Defense Appropriation Acts for fiscal years

1992 through 1996,23 the Secretary was given authority to cancel military 

debt up to $2,500 owed by soldiers or former soldiers so long as the 

indebtedness was incurred in connection with Operation Desert 

Shield/Desert Storm. Further, these appropriation acts authorized the 

Secretary to provide refunds to soldiers who had satisfied their debts. 

Opportunities Exist 

for Congress to 

Legislate a More 

Soldier-Friendly 

Process for Collecting 

GWOT Debts 

Facing similar concerns with military debts incurred by GWOT soldiers, 

Congress recently gave the Secretary authority, in the National Defense 

Authorization Act for Fiscal Year 2006, to cancel debts occurring on or 

after October 7, 2001, the date designated as the beginning of the OIF/OEF 

deployment. However, unlike the authority granted to provide debt relief 

for Operation Desert Shield/Desert Storm, the Secretary’s discretion under 

the fiscal year 2006 authorization act is generally more limited. For 

example, the Secretary was not given authority to issue refunds and he can 

not uniformly provide debt relief to all GWOT soldiers. Rather, the 

Secretary may only cancel debts of soldiers who are (1) on active duty or 

in active status; (2) within 1 year of an honorable discharge; or (3) within 1 

year of active release from active status in a Reserve component. 

Additionally, the Secretary’s authority under the fiscal year 2006 

authorization act terminates on December 31, 2007, and a more narrow 

statutory cancellation authority will be revived.24

There are two primary mechanisms in law to forgive soldier debt, 

including (1) authority to waive debts that result from payroll, travel, and 

other payment and allowance errors25 and (2) authority for remission 

(forgiveness) of debts involving hardship or fairness.26 The Fiscal Year 

2006 National Defense Authorization Act broadened remission authority to 

include debts of officers and any soldiers no longer on active duty for up 

 23 Pub. L. No. 102-172, § 8138, 105 Stat. 1212 (1991); Pub. L. No. 102-396, § 9100, 106 Stat. 

1926 (1992); Pub. L. No. 103-139, § 8071, 107 Stat. 1457 (1993); Pub. L. No. 103-335, § 8060, 

108 Stat. 2633 (1994); Pub. L. No. 104-61, § 8052, 109 Stat. 662 (1995). 

24 Under the more narrow statute, the Secretary will only be able to cancel an enlisted 

soldier’s debts existing before or at the time of the soldier’s discharge. 

25 10 U.S.C. § 2774 and 32 U.S.C. § 716. 

26 10 U.S.C. §§ 4837, 6161, and 9837. 

Page 19 GAO-06-494 Injured Soldier Debt
to 1 year. However, the remission authority in the act does not cover 

soldiers who were released from active duty more than 1 year ago and the 

waiver authority does not cover cancellation of debts due to error after the 

applicable 3-year statute of limitations. In addition, unlike waivers, 

soldiers who paid debts are not eligible for refunds under the remission 

statute. Further, the debt relief eligibility period for the three case study 

soldiers who separated in June 2005 will expire in the next few months. 

Our case studies showed that some battle-injured soldiers did not receive 

debt notification letters until 8 to 10 months after they separated from the 

Army. One 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 soldiers 

separated from the Army more than 1 year ago and these soldiers’ 

eligibility for debt relief under the fiscal year 2006 authorization act has 

already expired. Further, the debt relief eligibility period for the three case 

study soldiers who separated in June 2005 will expire in the next few 

months. 

Since the OIF/OEF deployment in October 2001, separated, battle-injured 

Army soldiers have faced considerable hardships related to collection 

action on their military service debts through no fault of their own, 

including forfeiture of separation pay and tax refunds; credit bureau 

reporting; and action by private collection agencies. The best solution to 

this problem is for DOD to prevent debts for these soldiers from 

happening in the first place, and our past reports have included numerous 

recommendations for correcting weaknesses in Army payroll systems and

processes. Over the past year, DOD and the Army have taken a number of 

actions to identify and relieve debts of separated battle-injured GWOT 

soldiers, and Congress has enacted broader authority for relief of some 

soldier debts. There are additional actions available to Congress if it 

wishes to make debt relief more soldier friendly. Because of a restriction 

in the current law, injured Army GWOT soldiers who separated from the 

service at different times have been treated differently, which raises 

questions of equity. Some of these soldiers may obtain debt relief, while 

others may not. Further, there is no current authority to issue refunds to 

battle-injured soldiers who previously paid debts that are now eligible for 

relief. Because the current debt relief authority expires on December 31, 

2007, injured soldiers and their families who have GWOT-incurred military 

debts could face the prospect of bad credit reports, visits by collection 

agencies, and offsets of their tax refunds if the authority is not available 

Conclusions 

Page 20 GAO-06-494 Injured Soldier Debt
throughout the OIF/OEF deployment and a reasonable period after the 

deployment ends. 

There are several matters that Congress should consider if it wishes to 

strengthen the Secretary’s authority to provide debt relief so that it can be

applied uniformly for all GWOT-incurred debt. First, Congress could 

consider legislation to grant DOD the following authorities. 

• Give the Service Secretaries authority to make debt relief available to all

injured GWOT soldiers regardless of when they separate from active duty. 

• Give the Service Secretaries authority to provide refunds to soldiers who 

have paid debts incurred while in an active status.

• Ensure that the Secretary of Defense has authority to cancel GWOTincurred debt throughout, and a reasonable period following, the 

deployment and thus, can exempt injured soldiers from debt collection 

action through credit bureau reporting and private collection agency and 

TOP action.

Second, we suggest that Congress consider directing the Secretary of 

Defense to take the following actions, as appropriate, in concert with any 

changes to debt relief provisions in law. 

• Take immediate action to make debt relief policy applicable to all GWOT 

soldiers who sustain battle injuries or are killed in combat-related actions. 

• Identify the military debts of battle-injured soldiers that were previously 

paid and were not subject to remission or waiver and issue refunds. 

We provided a draft of our report to DOD for comment. In oral comments 

received from the Office of the Secretary of Defense, the department 

concurred with our report. 

Matters for 

Congressional 

Consideration 

Agency Comments 

and Our Evaluation 

Page 21 GAO-06-494 Injured Soldier Debt
We are sending copies of this letter to interested congressional 

committees; the Secretary of Defense; the Deputy Under Secretary of 

Defense for Personnel and Readiness; the Under Secretary of Defense 

Comptroller; the Secretary of the Army; the Director of the Defense 

Finance and Accounting Service; and the Director of the Office of 

Management and Budget. We will make copies available to others upon 

request. 

Please contact Gregory D. Kutz at (202) 512-7455 or kutzg@gao.gov, if you 

or your staffs have any questions concerning this report. Contact points 

for our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. Major contributors to this report are 

acknowledged in appendix III. 

Gregory D. Kutz 

Managing Director 

Forensic Audits and Special Investigations 

Page 22 GAO-06-494 Injured Soldier Debt
Appendix I: Background Appendix I: Background 

The Federal Claims Collection Act of 1966, the Debt Collection Act of 

1982, the Debt Collection Improvement Act of 1996,1

 and related federal

regulations provide for collection of debts owed to the federal 

government, including the debts of battle-injured soldiers who had 

separated from the Army and fallen Army soldiers2 who served in the 

Global War on Terrorism. These laws and related federal regulations3

establish authority for the Department of Defense (DOD) and the 

Department of the Treasury to engage in federal debt collection actions. 

Out-of-service soldier debts occur when a soldier has separated from the 

service and is not receiving salary or other payments from the department 

that can be offset to collect debt owed to a defense agency or military 

service. DOD is authorized to write off debts of fallen soldiers; however, it 

may pursue collection of other deceased soldiers’ debts.4

 Out-of-service 

debts arise from a large number of circumstances, including overpayments

of pay and allowances (entitlements), such as hostile fire pay, hazardous 

duty pay, and family separation pay; travel advances for which expense 

vouchers have not been submitted; indebtedness related to public use of 

the DOD facilities or services, such as family medical services; and loss or 

damage of government property. Figure 2 illustrates the out-of-service 

debt collection process, including DOD actions and Department of the 

Treasury debt collection actions. 

 1

 Pub. L. No. 89-508, 80 Stat. 308 (1966); Pub. L. No. 97-365, 96 Stat. 1749 (1982); and Pub. L. 

No. 104-134, 110 Stat. 1321-1358 (1966). 

2

 Army soldiers discussed in this report include Active Component, Army National Guard, 

and Army Reserve soldiers. 

3

 31 C.F.R. Parts 900-904, Federal Claims Collection Standards (2005) and 31 C.F.R. Part

285, Debt Collection Authorities under the Debt Collection Improvement Act (2005). 

4

 31 C.F.R. 903.3 (a)(1). 

Page 23 GAO-06-494 Injured Soldier Debt
Appendix I: Background 

Figure 2: Out of-Service Debt Collection Process for WIA and Fallen Soldiers 

Day

404

FMS assesses

administrative fee, and

refers debt to second

private collection

agency for an additional

270 days

Second collection

agency

Day

122

FMS refers debt to

first collection

agency for

270-day period

First collection

agency

Day

682

DFAS writes off debt and may refer debt

to U.S. Attorney’s Office

Active collection

ends

Statute of

limitations

6

Years

U.S. Attorney

litigates debt in

federal court, obtains

judgement, and/or

returns debt

to DFAS

Justice

Department

DEPARTMENT OF JUSTICE

Day

2

DFAS notifies

soldier or soldier’s estate

of debt

by letter

1st

letter

1

Day

32

DFASassesses

retroactive interest on

unpaid, unchallenged

debt, and sends

second debt

notification letter to soldier

or soldier’s estate

2nd

letter

2

Day

62

DFAS refersunpaid,

unchallenged debt to

four major credit bureaus

and sends final debt

notification letter to soldier or soldier’s estate

3rd letter and

referral

3

Sends initial bill and

appropriate

follow-up notices

to soldier

Army

Finance

DFAS assesses penalty

and administrative fees, and refers unpaid, unchallenged debt to

Treasury Department,

Financial Management

Service (FMS)

DFAS

DDMS

Day

1

DFAS debt claims

staff validate incoming

debt and soldier

debt is established

in Defense Debt

Management System

(DDMS)

DFAS validates debt

DEBT

CERTIFIC

STATEMENT

ATION

Soldier dies or separates from

Army

Death or

separation

DD-214

Casualty

Report

Day

92

FMS enters debt in

Treasury Offset

Program (TOP)

Treasury

Department

TOP

Statute of

limitations

10

Years

Statute of limitations for collection through

offset expires, Treasury

Department reports debt

closeout to DFAS, and all

collection action ceases

TOP action

ends

TOP

Source: GAO analysis.

Family members

incur charges for

medical care

Family medical services

Errors in calculation can

result in debt

Errors in pay

calculation

Soldier fails to show for drills and

forfeits associated

pay

Failure to

show

Soldier is wounded

or killed in action and

pay is not adjusted

accordingly

Wounded

in action

Identifies

and documents debt

Army

Finance

Debt can be incurred in one or more of these ways Unpaid debts are identified for collection action

Day

681

FMS returns uncollected

debt from second private

collection agency to

DFAS as currently

uncollectible

Treasury

Department

DEBT

CERTIFIC

STATEMENT

ATION

NOT COLLECTIBLE COLLECTIBLE

?

Note: Process actions are noted as the day on which a particular action begins. In some cases there 

are intervening days to assess fees or prepare paperwork before the next step in the process begins. 

Debts of fallen soldiers are written off on Day 1 of this process; however, collection action may 

proceed against the estates of other deceased soldiers, depending on individual circumstances. 

Page 24 GAO-06-494 Injured Soldier Debt
Appendix II: Objectives, Scope, and Appendix II: Objectives, Scope, and Methodology 

Methodology 

The purpose of our audit was to determine the (1) extent to which Army 

soldiers serving in the Global War on Terrorism (GWOT) who were injured 

or killed by hostile fire and were released from active duty are having 

debts referred to credit bureaus and collection agencies and (2) the impact 

of Department of Defense (DOD) debt collection action on these soldiers 

and their families. You also asked us to discuss ways that Congress could 

make the process for collecting out-of-service debts more soldier friendly. 

To determine the extent of debt related to Army soldiers who served in 

Operation Iraqi Freedom and Operation Enduring Freedom and sustained 

battle injuries and left the service or were killed in action, we compared 

Army Wounded in Action and Killed in Action databases (referred to 

collectively in this report as WIA databases) maintained by the Defense 

Finance and Accounting Service (DFAS) Wounded-in-Action Support 

Team and compared the soldier records in these databases with debt 

records in the Defense Debt Management System (DDMS) for out-ofservice personnel. Soldier records are identified by soldier name and 

social security number in both the WIA databases and DDMS. The data 

used in our audit covered fiscal years 2002 through 2005—the first 4 years 

of the Operation Iraqi Freedom and Operation Enduring Freedom 

deployments. 

We assessed the reliability of data obtained from the WIA databases and 

the DDMS systems by obtaining an understanding of the processes used to 

collect and report the data, verifying control totals of data extracted and

used for file comparisons, validating the computer program used to 

perform the file comparison, asking systems officials to complete our data

reliability questionnaire, and analyzing selected transaction data for 

accuracy. We also considered findings and recommendations related to 

payroll problems and unidentified soldier debt in our previous audits1

 and 

our recent Fort Bragg investigation.2

 DFAS and the Army have

implemented procedures for reviewing and correcting soldier status and 

pay account information in the WIA databases and DDMS data is subjected 

to periodic DOD audits.

To determine the impact of debt collection actions on Army battle-injured 

and fallen soldiers and their families, we reached out to WIA soldiers and 

invited soldiers to contact us and share their experience. We focused on 

 1

 See footnote 1.

2 GAO-06-348R. 

Page 25 GAO-06-494 Injured Soldier Debt
Appendix II: Objectives, Scope, and

Methodology 

soldiers whose debts had been reported to credit bureaus and collection 

agencies. We were contacted by 19 separated battle-injured Army GWOT 

soldiers. We used the experiences of these soldiers to illustrate the 

hardships posed by debt collection action on battle-injured soldiers and 

their families. For all of the soldiers with debt problems who contacted us, 

we worked with the Army and DFAS to help resolve their debts. Where we 

were unable to independently validate our case study information, we 

attributed it to the soldiers and family members. We analyzed the DDMS 

data to confirm management assertions that DFAS does not pursue 

collection of debts of fallen soldiers. 

To determine ways that Congress could help make the debt collection 

process more soldier friendly, we considered debt relief provisions in 

current law, DOD and Army policy, and the experience of soldiers who 

contacted us as well as information obtained for case studies included in

our prior reports.3

 We reviewed federal laws and regulations and DOD and 

Army policies and procedures related to debt collection and relief of debt.

We met with Army, DFAS, and DOD officials to discuss their efforts to 

identify and resolve soldier debt. We also met with Department of the 

Treasury Financial Management Service (FMS) officials about their 

processes for collecting Army soldier debt referred by DFAS. In addition, 

we obtained independent confirmation from credit bureaus and FMS that 

DFAS had recalled credit bureau reporting and private collection agency 

and Treasury Offset Program referrals for WIA soldiers for active debt 

cases. On April 5, 2006, we requested comments on a draft of this report. 

We worked closely with the Army and DFAS to ensure the accuracy of the 

factual information in our report. We received oral comments from the 

Office of the Secretary of Defense on April 21, 2006, and have summarized 

those comments in the Agency Comments and Our Evaluation section of 

this report. We conducted our work from June 2005 through March 2006 in

accordance with generally accepted government auditing standards. 

 3

 See footnotes 1 and 3. 

Page 26 GAO-06-494 Injured Soldier Debt
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 27 GAO-06-494

Appendix III: GAO Contact and Staff 

Acknowledgments 

Gregory D. Kutz, 202-512-7455 

Staff making key contributions to this report include Stephen P. Donahue,

Dennis B. Fauber, Gayle L. Fischer, Danielle Free, Gloria 

Hernandezsaunders, Wilfred B. Holloway, John B. Ledford, Barbara C. 

Lewis, Renee McElveen, Richard C. Newbold, John P. Ryan, and Barry 

Shillito. 

GAO Contact 

Acknowledgments 

(192174) Injured Soldier Debt
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