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B-204404 1 (1981-11-03)

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DECISION




FILE:   B-204404


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THE COMPTROLLER GENERAL
OF THE UNITED STATES
WASHINGTON. D.C. 20548



      DATE: November 3, 1981


MATTER OF: Major Peter J. Mullen, USAF, Retired


DIGEST:


An Air Force officer who received read-
justment pay upon discharge subsequently
enlisted and completed 20 years of
active duty for retirement. Upon retire-
ment, the member's retired pay was with-
held until an amount equal to 75 percent
of his readjustment pay was recouped as
is required under 10 U.S.C. § 687(f).
Although the member received a discharge
in bankruptcy effective shortly after he
retired, this did not entitle him to
receive the retired pay withheld under
section 687. Deduction from retired pay
in the amount of 75 percent of readjust-
ment pay is not a debt and, therefore,
it is not discharged by an adjudication
of personal bankruptcy.


     This case concerns the effect of a discharge in bank-
ruptcy granted a service member on the retired rolls who
is not receiving retired pay because of the statutory require-
ment that his retired pay be withheld in the amount of 75 per-
cent of any readjustment pay he received. The specific ques-
tion is whether the amount to be withheld constitutes a debt
which is dischargeable in bankruptcy. We find that it is
not a debt and hence is not dischargeable in bankruptcy.

     The question was submitted for an advance decision by
the Accounting and Finance Officer, Air Force Accounting
and Finance Center, Denver, Colorado. The Department of
Defense Military Pay and Allowance Committee approved the
submission and assigned it Control Number DO-AF-1370.

     On July 31, 1975, Major Peter J. Mullen was involuntar-
ily released from active duty. Since he met the requirements
for readjustment pay under 10 U.S.C. 5 687, he was paid
$15,000 at the time of his release.

     On the day following his involuntary release, he enlisted
in the Air Force in the rank of sergeant. With this addi-
tional service as an enlisted member, he subsequently completed
20 years of active service and became entitled to retired pay
under 10 U.S.C. § 8911. The Air Force correctly determined

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