DoD 7000.14-R, Volume 5, Chapter 29

DoD Financial Management Regulation

Volume 5, Chapter 29
+ August 2003

SUMMARY OF MAJOR CHANGES TO
DOD 7000.14-R, VOLUME 5, CHAPTER 29
“COLLECTION OF OUT-OF-SERVICE DEBTS”
Substantive revisions are denoted by a + preceding
the section, paragraph, table, or figure that includes the revision
PARA

EXPLANATION OF CHANGE/REVISION

PURPOSE

2901

Introduces the revised chapter that covers the “Collection
of Individual Out-of-Service (OOS) Debts” that is
centralized using the Defense Debt Management System
(DDMS).
Elaborates on the OOS debt collection procedures in
accordance with the “Federal Claims Collection Standards”
regulation. Establishes the link among centralized debt
management processes and improved cash and credit
management and reporting procedures. Discusses
collection assistance and automated debt management and
controls for OOS debts that are generated by Department
of Defense pay systems.
Updates the “DDMS Debt Collection Steps: An Overview
of OOS Debt Collection” that previously was covered in
Chapter 28 of this volume.
Adds a certification statement form for use by Components
that shall accompany debts submitted for collection action
by the DDMS.

Updates the
chapter coverage

2902

Figure
29-1
Figure
29-2

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Updates policy
and guidance
consistent with
the “Federal
Claims Collection
Standards”
regulation
requirements
Updates current
DoD guidance
Adds a new
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TABLE OF CONTENTS

COLLECTION OF INDIVIDUAL OUT-OF-SERVICE DEBTS
+2901

Applicability

+2902

Collection of Individual Out-Of-Service (OOS) Debts

+Figure 29-1 Defense Debt Management System (DDMS) Debt Collection Steps
+Figure 29-2 Debt Certification Statement

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CHAPTER 29
COLLECTION OF INDIVIDUAL OUT-OF-SERVICE DEBTS
+2901 APPLICABILITY
290101.
General. Policies in this chapter apply to individual out-of-service (OOS)
debts referred by Department of Defense (DoD) Components to the Defense Finance and
Accounting Service, Out of Service Debt Management Office (DFAS-PO/DE), for collection
using the Defense Debt Management System (DDMS). The DFAS-PO/DE operates and
maintains the DDMS to provide centralized, cost-effective and collection assistance for
delinquent debts within the Department that are owed by individuals who currently are not paid
by the Department. Services provided by the DFAS PO/DE shall comply with the “Federal
Claims Collection Act of 1966,” as amended, (31 U.S.C. 3701 and following) and applicable
laws and regulations, including the “Federal Claims Collections Standards (FCCS)” and this
Regulation.
290102.
Exclusions. This chapter does not apply to debts owed by contractors,
sovereign entities, or nonappropriated fund instrumentalities, nor does this chapter apply to the
collection of child support, alimony, or commercial debts from the pay of DoD civilian
employees or military members. Refer to Table 28-1 in Chapter 28 of this volume to determine
the applicable volume and chapter in this Regulation that covers specific policies and procedures
for the collection and referral of debts from active members and employees through salary
offsets and garnishments, and the collection of debts owed by sovereign or foreign governments,
contractors, and other federal agencies. Procedures for handling loss of funds are described in
Chapter 6 of this volume.
+2902 COLLECTION AND PROCESSING OF INDIVIDUAL OOS DEBTS
+
290201.
Incidence of OOS Debts. OOS indebtedness occurs when an indebted
individual is not receiving salary or other payments from the Department that can be offset to
collect a debt owed to a DoD Component. OOS debts may arise from overpayments, erroneous
payments, indebtedness by the public for use of the Department’s facilities or services (usually
under emergency conditions), or indebtedness by individuals previously serving in or employed
by a DoD Component. (Installations and organizations that participate in the Department’s
centralized individual debtor program include, but are not limited to: Defense Intelligence
Agency, National Imagery and Mapping Agency, DoD Education Activity, and the National
Security Agency, financial services offices, Defense accounting offices, Defense military pay
offices, joint personal property shipping offices, military hospitals, DoD-contracted military
banking facilities, civilian pay offices, transportation offices, travel offices, and education
offices).
+
290202.
OOS Individual Debt Collection Procedures. Unless otherwise agreed to
by the DFAS PO/DE, creditor Components shall issue the initial bill, invoice, notice, or demand
for payment letter to the debtor and take appropriate follow-up action. (Note that after

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considering any reply to the initial demand for payment, Components normally should issue no
more than 2 follow-up notices to the debtor even though only one demand letter is required. The
number of demand or follow-up letters may be tailored to individual debts.) Transfer delinquent
OOS debts to the DFAS PO/DE for action 30 days after the last follow-up notice, or 45 days if
mailed to an overseas address.
DFAS PO/DE actions include servicing, collecting,
compromising, suspending, or terminating collection. Creditor Components shall complete any
previously initiated actions such as reclamation, appeal, litigation, or foreclosure before
transferring delinquent OOS debts to the DFAS PO/DE. The DFAS PO/DE shall assist
Components in the centralized management of debts, including automated, centralized
processing, referral, reporting, and accounting of debts.
A.
Activities that submit debts to the DFAS PO/DE shall research and verify
the military or civilian status of debtors to ensure that only eligible OOS debts are
referred. Components not supported by DFAS operating sites may obtain DDMS debt collection
services by entering into a Support Agreement (DD Form 1144) with the DMO. Once a
determination is made, in accordance with cash and credit management criteria, to refer the
debt(s) to the DFAS PO/DE, the DDMS will facilitate centralized processing of remittances.
B.
After completing all local collection actions, DoD Components shall
transfer OOS debts up to 90 days delinquent and above the dollar threshold (presently $225) to
the DFAS PO/DE for collection assistance unless there is significant, ongoing debt collection
action taking place. To avoid costly reconciliation with those Components that transfer debts to
the DFAS PO/DE for collection assistance, the DFAS sites shall use DDMS data to establish and
maintain accountability for these debts at the Departmental level. Use controlled transmission
procedures to ensure that transmitted debts are received by the DFAS PO/DE and preclude dual
reporting or omission of debts in the departmental accounting reports (including the report on
receivables due to the public).
C.
DoD Components shall prepare and submit a debt transmittal letter, in
duplicate, to the DFAS PO/DE, 6760 E. Irvington Place, Denver, CO 80279-7000, as required,
but no less frequently than weekly, to process delinquent debts. Use the transmittal letter to
control transmission of debt cases and identify all attached debt case files by name, social
security number (SSN), and amount. Include the name and telephone number of a point of
contact, as well as a copy of all documentation and background material in the debt case
files. This includes the installation name and location as well as:
1.

A copy of the original bill or other demand for payment;

2.
The original debt principal amount with complete accounting
classification and fiscal year to be credited with any collections;
3.

The date the debt became known;

4.

The date the debt was due;

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5.

The amount of accrued interest, administrative charges, penalty

6.

Copies of any follow-up correspondence;

fees;

7.
classification credited);

Amounts and dates of any prior collections (and the accounting

8.

The debtor’s branch of service or agency wherein formerly

9.

The debtor’s or spouse’s social security number;

employed;

10.
Military status and date of separation for members or employees
whose period of service or employment ended with an indebtedness;
11.

Copy of DD Form 139 (“Pay Adjustment Authorization”); and

12.

Any other relevant memoranda or data regarding the debt.

D.
Include in each transmittal package a statement certifying that the amounts
of the debts transmitted are correct, and that the debts are delinquent, valid, and legally
enforceable (Figure 29-2). The DFAS PO/DE shall return uncollectible debts, debts requiring
additional DoD Component collection action(s), or debts with incomplete documentation to the
transferring Component with an explanation of the reason for the return. After correcting any
defects, the Component shall resubmit the debt to the DFAS PO/DE using a subsequent
transmittal number. Do not resubmit debts using copies of the original transmittal letters.
E.
Assign a unique 9-digit transmittal number to each transmittal to control
debt transfers. Derive transmittal numbers using the date and the number of the transmittal on
that date. Express the date using the calendar year and Julian date of the transfer. For example,
assign transmittal number 200008801 to the first transmittal of March 28, 2000. If multiple
offices or activities at a single Component location transfer debts to the DFAS PO/DE, then the
submitting Component shall implement procedures to ensure that transmittal numbers are not
duplicated. DoD Components shall accomplish this using a central transmittal number control
log or other similar method derived by date. Numbers will only be unique within a Component.
F.
As Component transmittals are received and worked, the DFAS PO/DE
shall determine the effective transfer date for entering the debts in the DDMS for collection
action. The DFAS PO/DE shall annotate the effective transfer date on the duplicate copy of the
transmittal letter and return it to the submitting Component. On the effective transfer date, the
Component shall remove accountability for transferred debts from its records in accordance with
procedures in Volume 4, Chapter 3, of this Regulation. The DFAS PO/DE shall enter the debt
into the DDMS on the effective transfer date. For the quarterly “Report on Receivables”
required by the Department of the Treasury, use Line 5 to report the transfer-out and transfer-in
of these debts. Data recorded in the DDMS then are made available to the DFAS site supporting
the Component to assist that DFAS site is ensuring proper use of fund and financial accounting
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citations and accurately report these debts. DFAS sites establish debt accountability at the
minimum level of detail necessary to fulfill accounting and reporting requirements.
G.
Once debts are entered in the DDMS, DFAS PO/DE aggressively shall
pursue collection action. A general overview of the individual OOS delinquent debt collection
steps is illustrated in Figure 29-1. The procedures include referring delinquent debts to private
collection agencies for collection and reporting to credit bureaus, and transferring uncollectible
delinquent debts to the Department of the Treasury Offset Program and to the Department of
Justice for possible litigation. NOTE: Timelines indicated in Figure 29-1 are based on the date
that the debt first is transferred to the DFAS PO/DE and do not reflect the actual age of the
debt. In the case of deceased debtors, the DFAS PO/DE uses DD Form 2840 (“Request for
Information Regarding Deceased Debtor”) to seek information from state probate courts
concerning the establishment of an estate and pursues collection of the indebtedness in this
manner, as appropriate. A debtor may send a payment to the transferring Component while a
debt is undergoing collection action at the DFAS PO/DE. Should this occur, the Component
shall collect the payment into the applicable suspense account and then disburse it to the DFAS
PO/DE using a check or Intragovernmental Payment and Collection (IPAC) electronic
transaction so the debtor’s account can be updated. The receiving Component shall be sure to
include the debtor’s name and social security number so the proper account can be
credited. Send Department of the Treasury checks to the DFAS-PODA/DE, 6760 E. Irvington
Place, Denver, CO 80279-7000.
Send IPAC transactions to the DFAS-ADC/DE,
ALC: 00-380100.
H.
DoD Components shall follow Volume 7B, Chapter 28, of this regulation,
with regard to the collection of debts of retired military personnel from retired pay accounts.
I.
If 60 days have elapsed from the date of receipt of a Component
transmittal, and if there has been no response, then the Component shall follow-up with the
DFAS PO/DE to obtain the status of the transmittal.
+
290203.
Collection Assistance for Pay System-Generated OOS Debts.
Uncollectible debts on the Master Military Pay Account (MMPA) for Active Component (AC)
and Reserve Component (RC) due upon separation or retirement, as well as debts for offset from
retired pay, or annuitant pay periodically are transferred to the OOS DMO. Once these
system-generated debts are entered in the DDMS, they are treated the same as collection
action(s) taken on installation-generated debts. (Refer to Volume 8 for debt collection
procedures for retired or separated civilian employees.)
A.
Debts generated by military pay systems are created by a monthly transfer
from the Defense Joint Military Pay System (DJMS) and the Marine Corps Total Force System
(MCTFS) to the DDMS after end-of-month restructure is run. This is accomplished at the first
end-of-month restructure after the member goes into a “V” status.

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B.
Army, Navy, and Air Force AC MMPAs with a debt at separation create
an ADSN 3891 report that is maintained by the DFAS PO/DE. Army, Navy, and Air Force
RC MMPAs with a debt at separation are maintained manually by the DFAS PO/DE because
there is no capability to accomplish direct input in order to create this report.
1.
Military disbursing offices (DOs) will create input for the
ADSN 3891 report when documents are received that affect the pay accounts within immediate
access storage (IAS) during the current month plus 11 months. DOs shall not send documents to
the DMO for input when pay accounts are in IAS.
2.
DO input transactions will reject to the DFAS PO/DE and create
an entry on the Automated Case Control System. The DFAS PO/DE will validate the reject and
input corrected transactions, as required.
3.
DOs can verify that the DFAS PO/DE DMO has received and has
processed their transactions by viewing the Base Inquiry Request (JCCM) or the Closed Case
Request (JCLS).
4.
Marine Corps DOs will mail documents received after separation
to the DMO. Army, Navy, and Air Force DOs will mail documents received outside of IAS to
the DFAS PO/DE. In either instance, use the address in subparagraph 290202.C of this chapter.
C.
Defense Retiree and Annuitant Pay System (DRAS) debts are created if
payments are made after the entitlement has ended. Those debts are transferred each month by
an interface between DRAS and DDMS.

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(TIME LINE)

(DAY 1)

(DAY 2)

ESTABLISH DEBT
IN DDMS

NOTIFY DEBTOR
BY LETTER

YES
ASSESS INTEREST
RETROACTIVE TO
DATE OF
DELINQUENCY

(DAY 31 OF
INDEBTEDNESS)

COLLECT
?

SERVICE DEBT

NO
(DAY 32)

SEND 2ND LETTER
TO DEBTOR

YES
COLLECT
?

SERVICE DEBT

NO

(DAY 62)

SEND 3RD LETTER
TO DEBTOR
AND
REFER TO
CREDIT BUREAU

YES
COLLECT
?
ADD PENALTY FEE ON
DEBTS > 90 DAYS
DELINQUENT

ADD ADMINISTRATIVE FEE
(as appropriate)

SERVICE DEBT

(DAY 92)
NO
REFER TO
TREASURY
OFFSET PROGRAM
(TOP)
AND 1st PRIVATE
COLLECTION
AGENCY (PCA)

1

NOTE: The number of days (i.e., “Days”) depicted in this chart reflects the approximate number
of days that a debt has been recorded in the DDMS.
+ Figure 29-1. Defense Debt Management System (DDMS) OOS Debt Collection Steps

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(TIME LINE)

Volume 5, Chapter 29
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1

YES
COLLECT?

NO

(DAY 314)
ADD ADMINISTRATIVE FEE
(as appropriate)

SERVICE DEBT

REFER TO 2nd PCA

YES
COLLECT
?

SERVICE DEBT

NO
(NLT 1 YEAR)
ADD ADMINISTRATIVE FEE
(as appropriate)

REFER TO
DEPARTMENT OF
JUSTICE

YES
COLLECT
?

SERVICE DEBT

NO
WRITE-OFF DEBT AND
MAINTAIN DEBT AT
TREASURY FOR
ADMINISTRATIVE
OFFSET

YES
COLLECT
?
(Statute of Limitation
for offsets:
10 years after the
right to collect the
debt first accrued.
Refer to Volume 4,
Chapter 3, of this
Regulation)

SERVICE DEBT

NO
CLOSE-OUT DEBT

+ Figure 29-1 (Cont’d). Defense Debt Management System (DDMS) OOS Debt Collection
Steps

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CERTIFICATION STATEMENT
TO ACCOMPANY DEBTS SUBMITTED
TO THE DEFENSE DEBT MANAGEMENT SYSTEM (DDMS)
FOR COLLECTION ACTION
Pursuant to Title 28, United States Code, section 1746, I certify under the penalty of perjury that
to the best of my knowledge and belief that the debts submitted herewith are delinquent, valid
and legally enforceable in the amounts stated. The debts are not subject to any circumstances
that legally preclude or bar collection, including collection by offset. Records available do not
show that any debtor owing a debt has filed for bankruptcy protection.

________________
Date

_______________________________________
Signature of Debt Certifying Official
Print Name:___________________________________________
Title:_________________________________
Office Symbol:_________________________

PREPARATION AND SUBMISSION INSTRUCTIONS
REQUIRED SIGNATORY: The submitting office’s director, deputy director, or
designee.
MANUAL DEBT SUBMISSION: Prepare and send a copy of the Certification
Statement along with each manual submission of debts.
ELECTRONIC DEBT SUBMISSION: Prepare and mail a copy of the Certification
Statement to cover the electronic submission of debts to:
DFAS-POSA/DE,
6760 E. Irvington Place, Denver, CO 80279-7000. Prepare and mail a new Certification
Statement whenever the signatory changes. For those periodic electronic debt
submissions when it is not necessary to reissue and mail a paper copy Certification
Statement (i.e., no change in signatory), e-mail the Certification Statement to cover the
electronically transmitted debts. Contact DFAS-POSA/DE to obtain the current e-mail
address for submission of e-mailed certifications.

+ Figure 29-2. Debt Certification Statement

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