Citation Nr: 18160218 Decision Date: 12/26/18 Archive Date: 12/26/18 DOCKET NO. 15-31 700 DATE: December 26, 2018 ORDER Waiver of recovery of an overpayment of Chapter 33 educational assistance benefits in the amount of $1,789.66 is granted. FINDING OF FACT Recovery of the calculated overpayment of $1,789.66 would violate equity and good conscience. CONCLUSION OF LAW The criteria for waiver of recovery of the overpayment of Chapter 33 educational assistance benefits in the amount of $1,789.66 are met. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.911, 1.962, 1.963, 1.965 (2018). REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran served on active duty from July 2005 to May 2009. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from a March 2014 decision issued by the Department of Veterans Affairs (VA) Debt Management Center, which denied the Veteran’s request for waiver of overpayment in the amount of $1,789.66. The Veteran was scheduled to attend a Board hearing in Washington, D.C., in May 2017, but he did not report to the hearing as scheduled. A claimant has the right to dispute the existence and amount of debt owed to VA. 38 U.S.C. § 501 (2012); 38 C.F.R. § 1.911 (c) (2018). In determining whether a waiver of overpayment can be granted, VA’s analysis centers around three distinct questions. First, VA must determine if the overpayment at issue was created validly. Schaper v. Derwinski, 1 Vet. App. 430, 434-35. Here, however, the Veteran has not disputed the amount of the debt. Rather, he requests a waiver of recovery because of financial hardship. Consequently, the validity or amount of the debt is not at issue and need not be further addressed. 38 C.F.R. § 1.911 (c); VAOPGCPREC 06-98 (Apr. 24, 1998). Second, if the debt is determined valid, VA must determine whether fraud, misrepresentation, or bad faith played a role in its creation. If VA determines that such factors had a role in the debt’s creation, waiver of the overpayment is automatically precluded, and further analysis is not warranted. See 38 U.S.C. § 5302(a) (2012); 38 C.F.R. §§ 1.963 (a), 1.965(b) (2017); see also Ridings v. Brown, 6 Vet. App. 544 (1994) (holding that the Board must independently address the matter of bad faith before addressing whether waiver would be appropriate). The Board finds no evidence of fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the debt. Thus, the Board turns to the third question of whether collection of the debt would be against equity and good conscience. See 38 U.S.C. § 5302 (b); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2017). The debt at issue centers around Chapter 33 educational assistance benefits that were paid to the Veteran, totaling $1,789.66, for tuition, fees, and housing during his enrollment in the Penn State University – University Park from May 2013 through August 2013. The overpayment was created due to a reduction in 4 credits for that period. The Veteran asserts that the reduction in his credits was due to class completion. He also asserts that the school misinformed him that as long as he stayed above four classes (12 credits) there would be no effect to his benefits. In support of the Veteran’s assertion is a school certification record which pertains to a different academic period (from January 2013 to May 2013), but which states that a flat rate is charged for 12 or more credits with no change in tuition. The Veteran further asserts more importantly that the indebtedness would be an unnecessary financial hardship as he is living paycheck to paycheck at minimum wage. He explained that he is always a month behind on his rent and is catching up on bills. He added that he has dental issues and no insurance. The controlling legal criteria provide that the standard of “equity and good conscience” will be applied when the facts and circumstances in a particular case indicate the need for reasonableness and moderation in the exercise of the Government’s rights. 38 C.F.R. § 1.965 (a). The decision reached should not be unduly favorable or adverse to either side. The phrase equity and good conscience means arriving at a fair decision between the obligor and the United States Government. In making this determination, consideration may be given to factors which may include the following: (1) fault of the debtor (i.e., instances where the debtor’s actions contribute to the creation of the debt); (2) balancing of faults (i.e., weighing the fault on the part of the debtor against any fault attributable to VA); (3) undue hardship (i.e., whether recoupment of the debt would deprive the debtor or his or her family of basic necessities); (4) contrary to the purpose of the benefit (i.e., whether withholding of benefits or recovery would nullify the objective for which the paid benefits were intended; (5) unjust enrichment (i.e., consideration of whether failure to make restitution would result in an unfair gain to the debtor); (6) change of position to the claimant’s detriment (i.e., consideration of whether the claimant relayed on receipt of VA benefits in relinquishing a valuable right or incurring a legal obligation). 38 U.S.C. § 5302 (c) (2012); 38 C.F.R. § 1.965 (a) (2018). Regarding fault, the Board notes that the Veteran was notified properly by VA as to the terms of his eligibility to Chapter 33 benefits prior to his enrollment at Penn State. He was also given additional periodic notices regarding the terms of his eligibility and his responsibility to notify VA of any changes in his enrollment status. Thus, while he may have been misinformed by his school regarding the effect that withdrawing from class credits may or may not have had on his VA benefits, he knew or should have known of his responsibility to inform VA of the changes. Thus, he is at fault in the creation of the overpayment. Another element concerns balancing of faults, which requires weighing the fault of the debtor against the fault of VA. 38 C.F.R. § 1.965 (a)(2). Here, VA had no fault in creating the overpayment, as it made the payments upon confirmation of his enrollment for the 4 credits during the relevant time period that he dropped. Also, the Veteran would be unjustly enriched if the benefits were not recovered since failure to make restitution would result in unfair gain to the Veteran, as he was erroneously paid benefits to which he was not legally entitled. However, in weighing the various factors for consideration in granting a waiver, the Board finds that the factors outlined above are outweighed by the Veteran’s financial circumstances. That is, undue hardship would result to the Veteran if the debt is recovered. As noted, the Veteran has reported that that he is living paycheck to paycheck at minimum wage. He explained that he is always a month behind on his rent and is catching up on bills. He added that he has dental issues and no insurance. The financial status report that he provided in January 2014 shows total monthly expenses of $588 and no income. Moreover, the Veteran’s reported expenses and debts do not appear to be lavish or extravagant, but rather, reflect basic expenses such as shelter, food, and heat. In short, the evidence suggests that recovery of the debt at issue would result in undue hardship to the   Veteran. For these reasons, the Board grants waiver of recovery of overpayment of Chapter 33 educational assistance benefits in the amount of $1,789.66. Kristin Haddock Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD A. Shawkey, Counsel