[Code of Federal Regulations]
[Title 7, Volume 14]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1956.139]

[Page 270]
 
                          TITLE 7--AGRICULTURE
 
   CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS--COOPERATIVE 
SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT OF 
                         AGRICULTURE (CONTINUED)
 
PART 1956--DEBT SETTLEMENT--Table of Contents
 
       Subpart C--Debt Settlement--Community and Business Programs
 
Sec.  1956.139  Collections.

    (a) When the debtor offers a lump-sum payment in compromise or an 
initial payment on an adjustment offer, that payment will accompany the 
settlement application at the time the application is filed with the 
servicing official.
    (b) Except as provided in paragraph (c) of this section, debt 
settlement payments will be deposited and transmitted as required in 
Subpart B of Part 1951 of this chapter.
    (c) Checks or check transmittal letters containing restrictive 
notations such as ``Settlement in full'' or ``Payment in full,'' will be 
forwarded to the State Office where they will be retained until approval 
or rejection of the offer. The use of restrictive notations will be 
discouraged to the fullest extent possible.
    (d) All payments evidenced by Form FmHA or its successor agency 
under Public Law 103-354 451-2, ``Schedule of Remittances,'' bearing the 
legend ``Compromise Offer--FmHA or its successor agency under Public Law 
103-354'' or ``Adjustment Offer--FmHA or its successor agency under 
Public Law 103-354,'' will be held in the Deposits Fund Account by the 
Finance Office until notification is received from the State Office of 
the approval or rejection of the offer.
    (1) Upon receipt of an approved Form FmHA or its successor agency 
under Public Law 103-354 1956-1, remittances will be applied in 
accordance with established policies, beginning with the oldest loan 
included in the settlement, except that when the request for settlement 
includes loans made from different revolving funds, the Finance Office 
will prorate the amount received on the basis of the total principal 
balance due the respective revolving funds.
    (2) Upon notification of a rejection of a debtor's offer and receipt 
of a request from the State Director for a refund, the Finance Office 
will refund to the debtor, in care of the servicing official, the amount 
held in the Deposits Fund Account.
    (e) When a debtor's adjustment offer is approved, the accounts 
involved will not be adjusted in the records of the Finance Office until 
all payments have been made. Form FmHA or its successor agency under 
Public Law 103-354 1956-1 will be held in a suspense file pending 
payment of the full amount of the approved offer.
    (f) If an approved debt settlement agreement is later voided by the 
State Director in accordance with Sec.  1956.142(e) of this subpart, any 
payments which have been received shall be retained as payments on the 
debt owed at the time the compromise or adjustment offer was approved.

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