[Code of Federal Regulations]
[Title 7, Volume 7, Parts 700 to 899]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR792.10]

[Page 488-489]
 
                          TITLE 7--AGRICULTURE
 
                            CHAPTER VII--FARM
                SERVICE AGENCY, DEPARTMENT OF AGRICULTURE
 
PART 792--DEBT SETTLEMENT POLICIES AND PROCEDURES--Table of Contents
 
Sec. 792.10  Late payment interest, penalty and administrative charges.

    (a) Late payment interest provisions of this section shall not 
apply:
    (1) To debts owed by Federal agencies and State and local 
governments. Interest on debts owed by such entities shall be charged to 
the extent authorized under the common law or applicable statutory 
authority.
    (2) If an applicable statute, regulation, agreement, or contract 
either prohibits the charging of such interest or specifies the interest 
or charges applicable to the debt involved;
    (3) If the late payment interest is waived by FSA in accordance with 
Sec. 792.11.
    (4) To administrative charges as set forth in paragraph (f) of this 
section.
    (b) FSA will assess late payment interest on the full amount of 
delinquent debts. For purposes of this section, the term ``full amount 
of the delinquent debt'' means the sum of the principal, accrued program 
interest, and any other charges which are otherwise due and owing to FSA 
on the delinquent debt at the time the late payment interest is 
assessed, except as provided in paragraphs (a)(2) and (d)(3) of this 
section.
    (c) The late payment interest shall be expressed as an annual rate 
of interest which FSA charges on delinquent debts. The late payment 
interest rate shall be equal to the higher of the Treasury Department's 
current value

[[Page 489]]

of funds rate or the rate of interest assessed under the Prompt Payment 
Act, determined as of the date specified in paragraphs (d)(1) and (d)(2) 
of this section. The rate of interest assessed under the Prompt Payment 
Act was chosen as an alternative rate to ensure that the Government 
would recoup interest at a rate which was at least as high as that which 
it pays for late payments.
    (d)(1) When a debt results from a statute, regulation, contract, or 
other agreement with specific provisions for late payment interest and 
payment due date, late payment interest shall accrue on the amount of 
the debt from the first day the debt became delinquent, unless otherwise 
provided by statute.
    (2) With respect to debts not resulting from a statute, regulation, 
contract, or agreement containing specific provisions for late payment 
interest and payment due date, late payment interest shall begin to 
accrue from the date on which notice of the debt, including notice of 
late payment interest, is first mailed or hand-delivered to the debtor.
    (3) The rate of late payment interest initially assessed will be 
fixed for the duration of the indebtedness, except when a debtor has 
defaulted on a repayment agreement and seeks to enter into a new 
agreement. FSA may then set a new rate of interest which reflects the 
late payment interest rate in effect at the time the new agreement is 
executed. All charges which accrued, but which were not collected under 
the defaulted agreement, shall be added to the principal to be paid 
under a new repayment agreement.
    (4) The late payment interest on delinquent debts will accrue on a 
daily basis.
    (e) Except as specified in paragraph (a)(2) of this section, a 
penalty charge of three (3) percent per annum will be assessed on any 
portion of a debt which remains unpaid ninety (90) days after the date 
described in paragraph (d)(1) or (d)(2) of this section, if no repayment 
schedule satisfactory to FSA has been agreed upon. Such penalty charge 
will be assessed retroactively from the date late payment interest began 
to accrue and applied on a daily basis. Such rate shall continue to 
accrue until the delinquent debt has been paid.
    (f) FSA shall assess as administrative charges the additional costs 
of processing delinquent debts against the debtor, to the extent such 
costs are attributable to the delinquency. Such costs include, but are 
not limited to, costs incurred in obtaining a credit report, costs of 
employing commercial firms to locate debtor, costs of employing 
contractors for collection services, costs of selling collateral or 
property to satisfy the debt.
    (g) When a debt is paid in partial or installment payments, payments 
will be applied first to administrative charges, second to the penalty 
charge assessed in accordance with paragraph (e) of this section and 
late payment interest, and third to outstanding principal.