Bank error in your favor -- Collect $15,000

[kork13]

I feel like the monopoly man, just landed on Community Chest, and it's scaring the heck out of me.

The thread title kind of says it all... This literally just happened to me -- I just got my pay statement for this month, and the military finance system against all reason and logic somehow thinks that I have been underpaid since Jan '09 to the sum of approximately $15,000. To my understanding, that is not at all correct. What's worse, I tried to bring it to the attention of my local military finance office, and they insist that it's correct... but really, they're only basing that insistence on what they're being told by the same computer system that made the error! Even more disconcerting, I'm the 3rd person to have had this exact thing happen, each of us getting "back-paid" over $12k (all 3 of us recently transferred here after finishing our training together).

Considering the high amount of money, I'm rather nervous about how this will end up. The military pay system is well-known for making an error similar to this (rarely such a high-dollar screw up though!) then coming back a month or two later and either yanking it all back at once, which means you don't get a paycheck until it's paid back, or sending you a letter informing you that it will be taken out of your pay over a period of 12 months. I've had this kind of thing happen before (mistakenly got overpaid, though last time it was just a few hundred dollars), and believe me, life bites when you owe the government money. Thus my terror.

The other side of this is what to do with it. Obviously, I'm not going to touch it... Believe me, the temptation is real to go out and finally actually buy a TV for myself or something, but going on the almost certain assumption that they'll eventually want this money back, I'm not spending any of it. So I'm basically just gonna hold onto it and earn some interest on it for now. But how to do that? CD's, savings, something else, ...? I sort of lean toward Ally's 5-yr CD (with only a 2-month penalty for early withdrawal), but perhaps I should go with the absolute liquidity of a lower-yielding savings account.

Last thought... Has anyone else ever had some sort of bank error, or even just suddenly received an extraordinary and unexpected sum of money? It's pretty wild IMO, so I'm just curious about how other people react to suddenly coming into cash (legitimately or mistakenly), and what you have done with it.

[disneysteve]

I would keep it liquid. It isn't your money and they will want it back when they catch the error. Keep it where you can quickly access it. Forget about what it earns.

[maat55]

I never spend these types of transactions until I'm certain it is correct. I recently recieved a 300 dollar check from the Treasury for an supposed over payment, then 1 month late a bill for it with interest.

[Snodog]

A few months ago my paycheck was about 1.5 times what it should have been.

I was honest and told them and it was corrected.

In your situation I would definitely not spend it.

I would keep the money liquid and remember the name of the person who told you it was your money.

[LuxLiving]

Right now? The interest would be minimal. I'd keep it right where it is and forget it till they come calling for it.

[jpg7n16]

You could try to get someone to certify it to you in writing from the payroll office. Bring in bank statements showing how much was deposited.

Then when they correct it, you'd have ample evidence for why you shouldn't be charged interest, or should be refunded any fees or anything.

Like everyone else above me, I feel it's an error - that will corrected sometime soon when someone with a brain looks at it. Do not spend it whatever you do.


I used to work for a bank and we outsourced our processing - I've seen a few bank errors in my day. Not too many, considering the volume of transactions we did each day - maybe about 10-20 over 2.5 years: like the inputting agent missed a decimal point, or transposed 2 numbers in the account number. We had reports to check for stuff like that, and we'd correct the mistake as soon as possible. Banks can be wrong. So can payroll offices. Eventually, they'll get it straight.

[creditcardfree]

As a military wife, I would hold on to it. I would not put it into anything, but a basic account. I would skip the CD you are thinking about even. There is some retro pay issues right now due to stop loss, but I don't know if that applies to you. Or are they saying bonus pay or just basic pay?

In January '09, it took awhile for congress to approve raises. I think initally they were one percentage and they later increased. There were also issues withholding too much state income tax for quite a few states, however, this should have been refunded to you when you filed your return if you had overpaid.

You will want to look into how this will affect your taxes for 2010, if they do not pull that money back. In other words they just increased your net pay by $15K, which will be taxable income.

Good luck. I'd keep talking up the chain about the issue until you can get a very clear answer about this money. I hope it is yours to keep!!

[FHA Loan]

As everyone else has advised you... do NOT spend this money. I would set it aside somewhere safe where it is easily accessible. I would document all attempts to give it back, including the names and numbers of people you spoke with about it.

I would try to get to the bottom of it and determine whether it is in fact legitimate or not before year end, as there WILL be tax implications. It would suck to have them come back 3 years later for the money and then have to revise you last 3 years worth of tax returns.

Good luck!

[terces]

Don't you love dealing with the miltary over pay issues? The opposite happened to us. DH had money being withdraw and given to someone else over several months that he didn't notice until I looked at his pay statment. Felt sorry for the person who got hit with a sudden "bill" but hey that was my money. Definitely keep it liquid. They will come a calling eventually....if they ever figure it out.

[Ima saver]

I got credited with too much money from my bank one month. I just left it in my checking account and eventually they found the mistake and debited the amount out. I would just hold on to it.

[kork13]

There is some retro pay issues right now due to stop loss, but I don't know if that applies to you. Or are they saying bonus pay or just basic pay?

You will want to look into how this will affect your taxes for 2010, if they do not pull that money back. In other words they just increased your net pay by $15K, which will be taxable income.

That's the weird thing... All of the "backpay" is in my housing allowance. The entire time I've been in, my housing allowance has lined up pretty closely to what my rent was, and now they're trying to tell me that it should have actually been over $600 more each month than what I was getting, which was (IMO) already somewhat generous. Thankfully, it's not taxable, so at least all this mess won't have an impact on my taxes.

As many of you all have said, I have absolutely zero intention of spending a cent of it... The LAST thing I want is a bunch of new "stuff" when Uncle Sam comes calling and I owe them nearly $15k in cash that I've already spent. ::shudder:: And I guess you're all right, forget a CD or anything like that... When they finally come back for it, it'll be all of a sudden, and the easier it is to give it back, the better.

The only question now is how long it will take them... The other 2 guys who have had this happen, it's already been months since it happened, and haven't heard a word about it. While I suppose I shouldn't complain about having an extra $15k in my accounts, the unknown of when/how it'll be taken back is a bit unnerving.

[creditcardfree]

Kork, look here to see BAH rates for prior years. Compare the amounts to your LES and see if they really are different. I hope it helps clear it all up!

Oh, and BAH is based on location not what your actual rent is. Therefore, your rent could be higher or lower than the BAH. Our house payment is about $400 less than the BAH we receive. I buy what I can afford or feel comfortable buying not what our housing allowance allows.

[kork13]

Kork, look here to see BAH rates for prior years. Compare the amounts to your LES and see if they really are different. I hope it helps clear it all up!

Oh, and BAH is based on location not what your actual rent is. Therefore, your rent could be higher or lower than the BAH. Our house payment is about $400 less than the BAH we receive. I buy what I can afford or feel comfortable buying not what our housing allowance allows.

Yes, I understand the deal with BAH (believe me, I took advantage of that when I shared an apt with 2 roommates!), but the BAH rate is also tied to the local "average" rental prices. To date, I've been receiving what is listed by the BAH site you referenced, but their computer system suddenly seems to think that I should have received $600/mo more, and after I promoted this Spring, $1200/mo more. It's madness. I'm sure they'll figure it out eventually, just a question of when.

[mrpaseo]

Spend it all, then complain about how "they" are trying to screw you when they take it back... It never ceases to amaze me how many Soldiers will use this defense... They know they are being over paid, they spend the money, then complain that it's the fault of everyone else.

You are doing the right thing, do not spend the money, allow it to sit in your account until you start to get "no pay due's". Then, use that money to support yourself. I would exercise the recommendation of knowing who you spoke with at finance as well as your S1. Truthfully, your S1 should sit down with you and explain it all or totally understand your side of the story... Do not allow time to pass, with each pay period that this is not corrected, start the process over until you are given a direct order to stand down. Then, get it in writing, you might want to get your CSM involved (In the Army that's Command Sergeants Major, I'm not sure which branch your in).

I'm not sure about the rules for "Interest" due (Never heard of that), but I know the stories of them taking their money all at once. If you can prove "No fault of the Soldier" by making honest effort to correct the issue, they can span the repayment out over 12 months.

Keep in mind, I'm a Communications guy, not a PAC clerk, but all the info here is from experience from myself, and my Soldiers.

Best of luck,
Ray

PS. I do hope in the end, you are wrong and you get to keep the money, this will make a nice Emergency fund for your future.

[Like2Plan]

Last thought... Has anyone else ever had some sort of bank error, or even just suddenly received an extraordinary and unexpected sum of money? It's pretty wild IMO, so I'm just curious about how other people react to suddenly coming into cash (legitimately or mistakenly), and what you have done with it.

Last year around this time, my paycheck was more than I expected (not as good as yours, though ) There was another line on my earnings statement labeled "other award"... I asked my boss if it was some sort of mistake--he said nope--go ahead and spend it. (It turned out to be an award due to a special project that I had been working on... )