Debt Collection

Pursuant to a congressional request, GAO reviewed: (1) the Army's efforts and practices in collecting out-of-service debts; (2) the manner in which the Army incurs debt; (3) procedures for referring debts to the Justice Department; and (4) the Army's criteria for writing off such debts.

GAO noted that: (1) like other federal agencies, the Army has not taken aggressive debt collection actions; (2) the Army's efforts to collect debts produce minimal returns; and (3) the largest portion of out-of-service debt results from bonus program payments that have not been fully recouped. GAO found that: (1) in the past 5 years, there have been significant increases in debt receivables and write-offs; (2) in fiscal year 1985, the write-off rate was about double the collection rate; (3) debtor financial information was questionable; (4) Army regulations which authorize and direct collection activities have not been updated; and (5) the Army's automated system does not provide complete and accurate management information. GAO also found that: (1) the Army encounters problems in collecting outstanding out-of-service debt because soldiers leave the service before their terms of enlistment expire; (2) Army procedures for referral actions comply with federal standards but result in minimal collections; (3) local disbursing offices were not following regulations to stop unearned pay and benefits being sent to separating service members; (4) the Army was not charging penalties and administrative charges to outstanding debts; and (5) if a debt is compromised, the Army will write off the amount of the debt in return for a partial payment.