CFR Subpart B

CFR Subpart B
in effect

22 C.F.R. § 1506.9 What does a collection action entail?

(a) The Agency will undertake prompt action to collect all debts owed to the United States arising out of USADF activities and to reduce debt delinquencies. A collection action may include sending a written notice in the form of a Bill for Collection or demand letter to the debtor's last known address. When necessary to protect the Government's interest (for example, to prevent the running of a statute of limitations), a written demand may be preceded by other appropriate actions under the Federal Claims Collection Standards, including the immediate referral to DOJ for litigation or collection by salary offset. The CFO may contact the debtor by telephone, in person and/or in writing to demand prompt payment, to discuss the debtor's position regarding the existence, amount or repayment of the debt, to inform the debtor of its rights (e.g., to apply for a waiver of indebtedness or to request an administrative review) and of the basis for the debt and the consequences of nonpayment or delay in payment. (b) The CFO will maintain an administrative file for each claim. The administrative file will document the basis for the debt, all administrative collection actions regarding the debt (including communications to and from the debtor) and the final disposition of the debt. Information on an individual debtor may be disclosed only for purposes consistent with this Part, the Privacy Act of 1974, and other applicable law.

22 C.F.R. § 1506.10 What information is included in a written demand for payment?

(a) The Bill for Collection or demand letter shall inform the debtor of: (1) The amount, nature and basis of the debt; (2) The right of the debtor to inspect and copy records related to the debt; (3) The right of the debtor to discuss and propose a repayment agreement; (4) Any rights available to the debtor to dispute the validity of the debt or to have recovery of the debt waived (citing the available review or waiver authority, the conditions for review or waiver, and the effects of the review or waiver request on the collection of the debt); (5) The applicable standards for imposition of interest charges and penalty charges and administrative costs that may be assessed against a delinquent debt; (6) The date by which payment should be made to avoid late charges (i.e. interest, penalties, and administrative costs), which may be not more than 30 days from the date that the demand letter is mailed or hand-delivered; (7) The name, address, and telephone number of a person or office within USADF available to discuss the debt; (8) The intention of USADF to enforce collection if the debtor fails to pay or otherwise resolve the debt, by taking one or more of the following actions: (i) Offset from Federal payments otherwise due to the debtor, including income tax refunds, salary, certain benefit payments, retirement, vendor payments, travel reimbursement and advances, and other Federal payments; (ii) Referral to a private collection agency; (iii) Report to credit bureaus; (iv) Administrative wage garnishment; (v) Referral to the Department of Justice for litigation action if the debt cannot be collected administratively; (vi) Transfer of any debt delinquent for more than 180 days to the Department of Treasury for collection; and (vii) Other actions authorized by the FCCS and applicable law. (9) Any rights available to the debtor to dispute the validity of the debt or to have recovery of the debt waived (citing the available review or waiver authority, the conditions for review or waiver, and the effects of the review or waiver request on the collection of the debt); (10) The instructions for making electronic payment; and (11) Requirement that the debtor advise USADF of any bankruptcy proceeding. (b) USADF may omit from the written demand for payment one or more of the provisions contained in paragraphs (a)(8) through (11) of this section if USADF determines that any provision is not legally required given the collection remedies to be applied to a particular debt, or which have already been provided by prior notice, applicable agreement, or contract. (c) USADF will respond promptly to communications from the debtor. Responses will generally be made within 30 days of the receipt of the communication from the debtor.

22 C.F.R. § 1506.11 May I request a review of the existence or amount of a claim?

(a) USADF shall provide the debtor with a reasonable opportunity for an internal review of the existence or amount of the debt. For offset of current Federal salary under 5 U.S.C. 5514, a debtor may also request a hearing. (See subpart C of this part). (b) A request for a review must be submitted in writing to the appropriate contact office by the payment due date indicated in the Bill for Collection or demand letter. The request must state the basis for the debtor's dispute of the claim and include any relevant documentation in support. (1) USADF will provide for an internal review of the debt by an appropriate official. The review may include examination of documents, internal discussions with relevant officials and discussions with the debtor, at USADF's discretion. (2) An oral hearing is not required when USADF determines that the matter can be decided on the documentary record. When an oral hearing is not required, USADF shall accord the debtor a “paper hearing,” that is, a determination of the request for reconsideration based upon a review of the written record. (3) Unless otherwise required by law, an oral hearing under this section is not required to be a formal evidentiary hearing, although USADF will carefully document all significant matters discussed at the hearing.

22 C.F.R. § 1506.12 What happens if my debt becomes past due?

USADF will transfer to the Department of Treasury's Bureau of Fiscal Services (BFS) any past due, legally enforceable non-tax debt that has been delinquent for 120 days or more for administrative offset, and delinquent for 180 days or more for other collections. BFS may take appropriate action to collect the debt in accordance with applicable law and regulation. USADF may transfer any past due, legally enforceable debt that has been delinquent for fewer than 120 days to BFS for collection in accordance with applicable law and regulation.

22 C.F.R. § 1506.13 How are interest, penalty, and administrative costs determined?

(a) Interest. USADF will assess interest on all delinquent debts, unless prohibited by statute, regulation, or contract. (1) Interest begins to accrue on all debts from the payment due date established in the initial notice to the debtor, or as otherwise provided by law. USADF shall charge an annual rate of interest that is equal to the rate established annually by the Secretary of the Treasury in accordance with 31 U.S.C. 3717 unless a different rate is necessary to protect the rights of the United States. USADF will notify the debtor of the basis for its finding that a different rate is necessary to protect the interest of the Government. (2) The rate of interest, as initially assessed, shall remain fixed for the duration of the indebtedness. If a debtor defaults on a repayment agreement, interest may be set at the Treasury rate in effect on the date a new agreement is executed. (3) Interest will not be assessed on interest charges, administrative costs or late payment penalties. However, where a debtor defaults on a previous repayment agreement and interest, administrative costs and penalty charges that had been waived under the defaulted agreement may be reinstated and added to the debt principal under any new agreement and interest may be charged on the entire amount of the debt. (b) Administrative costs of collecting overdue debts. The costs of USADF's administrative processing of overdue debts, including charges assessed by the Department of Treasury in cross-servicing the debts based on either actual or average cost incurred, will be charged on all debts. These costs include both direct and indirect costs. (c) Penalties. Penalty charges will be assessed at 6 percent a year on any portion of a claim that is delinquent for more than 90 days. (d) Allocation of payments. A partial payment by a debtor will be applied first towards outstanding administrative costs, penalty assessments, accrued interest and then towards the outstanding debt principal. (e) Waivers. (1) USADF will waive the collection of interest and administrative charges on any portion of the debt that is paid within 30 days after the date on which late payment charges begin to accrue. This 30 day period may be extended on a case-by-case basis where the Agency determines that such action is in the best interest of the Government. (2) USADF may (without regard to the amount of the debt) waive collection of all or part of accrued interest, penalty or administrative costs, where it determines that: (i) Waiver is justified under the criteria of subpart D; or (ii) Collection of these charges would be against equity and good conscience or not in the best interest of the United States. (3) A decision to waive interest, penalty charges or administrative costs may be made at any time.

22 C.F.R. § 1506.14 Does interest accrue during the period pending waiver or review?

During the period pending waiver or review, USADF may suspend accrual of interest, penalty charges, and administrative costs on any disputed portion of the debt if it is determined that suspension is in the Agency's best interest or would serve equity and good conscience. Interest, penalty, and administrative costs will not be assessed where a statute or regulation specifically prohibits collection of the debt during the period of the administrative appeal or the Agency review.

22 C.F.R. § 1506.15 Does USADF contract with other agencies for collection services?

(a) USADF has entered into a cross-servicing agreement with the Bureau of Fiscal Services (BFS) of the Department of Treasury. BFS will take appropriate action to collect and/or compromise transferred debts in accordance with applicable statutory and regulatory requirements. BFS may take any of the following collection actions on behalf of USADF: (1) Send demand letters on U.S. Treasury letterhead and telephone debtors; (2) Refer accounts to credit bureaus; (3) Purchase credit reports to assist in the collection effort; (4) Refer accounts for offset, including tax refund, Federal employee salary, administrative wage garnishment, and general administrative offset under the Treasury Offset Program; (5) Refer accounts to private collection agencies; (6) Refer accounts to the Department of Justice for litigation; (7) Report written off or discharged debt to the Internal Revenue Service (IRS) on the appropriate Form 1099; (8) Take any additional steps necessary to enforce recovery; and (9) Terminate collection action, as appropriate. (b) BFS will maintain records on debt transferred to it, assure that accounts are updated as necessary, and modify its delinquent debt and debtor records with information obtained from its skip tracking and asset-location services as appropriate. In the event that a referred debtor disputes the validity of a debt or any terms and conditions related to any debt not reduced by judgment, BFS may return the disputed debt to USADF for its determination of debt validity.

22 C.F.R. § 1506.16 Does USADF report delinquent debts to consumer reporting agencies?

USADF may report delinquent debts to appropriate credit reporting bureaus and other automated databases through the cross-servicing agreement with BFS. Any such disclosure will be done in accordance with 31 U.S.C. 3711(e) and the Federal Claims Collection Standards, 31 CFR 901.4, and in compliance with the Bankruptcy Code and Privacy Act 5 U.S.C. 552a.

22 C.F.R. § 1506.17 For what purposes may USADF use my mailing address?

When attempting to locate a debtor in order to collect or compromise a debt, USADF may obtain the debtor's mailing address from the Internal Revenue Service. Addresses obtained from the Internal Revenue Service will be used by USADF, its officers, employees, agents or contractors and other Federal agencies only to collect or dispose of debts, and may be disclosed to other agencies and to collection agencies only for collection purposes.

22 C.F.R. § 1506.18 Will USADF suspend or revoke my financial assistance or other privileges if I fail to pay my debt?

Unless waived by the Head of the Agency, USADF will not extend financial assistance in the form of a grant, loan, or loan guarantee to any person delinquent on a non-tax debt owed to a Federal agency. The authority to waive the application of this section may be delegated to the Chief Financial Officer and re-delegated. USADF may also suspend or revoke other privileges for any inexcusable, prolonged or repeated failure of a debtor to pay a claim. Additionally, the Agency may suspend or disqualify any contractor, lender, broker, borrower, grantee or other debtor from doing business with USADF or engaging in programs USADF sponsors or funds if a debtor fails to pay its debts to the Government within a reasonable time. Debtors will be notified before such action is taken and applicable debarment procedures will be used.

22 C.F.R. § 1506.19 May I pay my debt in installments?

(a) Whenever feasible, USADF shall collect the total amount of a debt (including interest, penalty, and administrative cost) in one lump sum. If the debtor is financially unable to pay the debt in one lump sum, USADF may accept payment in regular installments. USADF will obtain financial statements from debtors who represent that they are unable to pay on one lump sum and independently verify such representations whenever possible. In addition, USADF will obtain a legally enforceable written agreement from the debtor that specifies all of the terms of the arrangement and contains a provision accelerating the debt in the event of a default. (b) The size and frequency of the installment payments will bear a reasonable relation to the size of the debt and the debtor's ability to pay. To the extent possible, the installment payments will be sufficient in size and frequency to liquidate the debt in three years or less. (c) In appropriate cases, the Agency will obtain security for deferred payments. However, USADF may accept installment payments notwithstanding the refusal of the debtor to execute a written agreement or to give security.

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