1. Short title This Act may be cited as the Veteran Debt Fairness Act of 2018 . 2. Limitations on authority of the Secretary of Veterans Affairs to recover amounts owed by veterans to the United States (a) Indebtedness offsets Section 5314 of title 38, United States Code, is amended as follows: (1) In subsection (a)— (A) by inserting Authority To offset; limitations.— (1) before Subject to ; (B) by striking subsections (b) and (d) of this section and and inserting paragraphs (2) and (3) of this subsection, subsections (b) and (d) of this section, and ; and (C) by adding at the end the following new paragraph: (2) The Secretary may make a deduction under paragraph (1) only if— (A) the indebtedness to the United States described in that paragraph— (i) is the result of an error, a misrepresentation, or fraud by the person described in that paragraph; (ii) in the case of an error by the person described in that paragraph, is less than five years old; (iii) is not in dispute under regulations prescribed pursuant to subsection (d)(2)(A); and (iv) exceeds $2,500; and (B) the Secretary determines that the amount of the indebtedness exceeds the cost to the Department to recover the indebtedness. (3) The Secretary may not make a deduction under paragraph (1) to a payment under chapter 11 or 15 of this title that exceeds the lesser of— (A) 25 percent of the payment; and (B) a percentage that the Secretary determines is the greatest percentage that would not cause a hardship to the recipient. . (2) In subsection (b)— (A) by striking Deductions may not be made and inserting Notice required.— No deduction may be made ; (B) by striking unless the Secretary and inserting until after ; (C) by amending paragraph (1) to read as follows: (1) the Secretary has made reasonable efforts to notify the person of the person's right— (A) to dispute the existence or amount of such indebtedness under regulations prescribed pursuant to subsection (d)(2)(A); (B) to request a waiver of such indebtedness under section 5302 of this title