Claim Raven explanation
What this means
VA uses the equity-and-good-conscience standard to reach a fair decision about collecting a debt. It considers fault, hardship, the benefit’s purpose, unfair gain, and harmful reliance, while fraud, material misrepresentation, or bad faith bars waiver.
Bad faith under this rule involves unfair or deceptive dealing intended to gain an unfair advantage, with knowledge of likely consequences, that causes a government loss. It is not simply another label for a mistaken payment or an unfavorable debt finding.
How this helps your claim
The listed factors are not a mechanical checklist and are not stated as an exhaustive list. VA is directed to use reasonableness and moderation without making the result unduly favorable or adverse to either side. The facts tied to each factor matter more than repeating the factor’s name.
What to check in your records
Match each factor you rely on to dates, payment records, communications with VA, a household budget, or other concrete evidence.
- Build a timeline showing what information you reported, what VA knew, and when the overpayment continued.
- List basic household necessities and reliable monthly amounts if collection would cause hardship.
- Identify any valuable right given up or legal obligation incurred because you reasonably relied on the VA payments.
Explain the factors with evidence
For fault, distinguish what you reported from what VA processed. For hardship, show basic needs rather than only total debt. For defeat of purpose, explain how recovery would interfere with the objective of the benefit involved.
Address facts that cut against waiver too. A balanced explanation can show where VA contributed to the debt while acknowledging information you could have supplied sooner. The standard calls for a fair decision based on the whole situation.
Does financial hardship automatically require waiver?
No. Undue hardship is one important factor, but VA considers the full equity-and-good-conscience standard and first determines whether a statutory bar such as fraud, misrepresentation, or bad faith applies.
Official regulatory text
38 CFR § 1.965
eCFR snapshot: 2026-09-17. Layout and spacing are adapted for reading. The full section and its tables are included below.
§ 1.965 Application of standard.
(a) The standard “Equity and Good Conscience”, will be applied when the facts and circumstances in a particular case indicate a need for reasonableness and moderation in the exercise of the Government's rights. 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 Government. In making this determination, consideration will be given to the following elements, which are not intended to be all inclusive:
(1) Fault of debtor. Where actions of the debtor contribute to creation of the debt.
(2) Balancing of faults. Weighing fault of debtor against Department of Veterans Affairs fault.
(3) Undue hardship. Whether collection would deprive debtor or family of basic necessities.
(4) Defeat the purpose. Whether withholding of benefits or recovery would nullify the objective for which benefits were intended.
(5) Unjust enrichment. Failure to make restitution would result in unfair gain to the debtor.
(6) Changing position to one's detriment. Reliance on Department of Veterans Affairs benefits results in relinquishment of a valuable right or incurrence of a legal obligation.
(b) In applying this single standard for all areas of indebtedness, the following elements will be considered, any indication of which, if found, will preclude the granting of waiver:
(1) Fraud or misrepresentation of a material fact (see § 1.962(b)).
(2) Bad faith. This term generally describes unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government.
(Authority: 38 U.S.C. 5302(c))
[39 FR 26400, July 19, 1974, as amended at 58 FR 3841, Jan. 12, 1993; 58 FR 7296, Feb. 5, 1993; 69 FR 62202, Oct. 25, 2004]
Related references
- 38 CFR § 1.963: Requesting a waiver of a VA benefit overpayment
- 38 CFR § 1.911: What a VA benefit debt notice must explain
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