[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR901.2]

[Page 1336-1337]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
   CHAPTER IX--FEDERAL CLAIMS COLLECTION STANDARDS (DEPARTMENT OF THE 
                    TREASURY--DEPARTMENT OF JUSTICE)
 
PART 901_STANDARDS FOR THE ADMINISTRATIVE COLLECTION OF CLAIMS
--Table of Contents
 
Sec. 901.2  Demand for payment.

    (a) Written demand as described in paragraph (b) of this section 
shall be made promptly upon a debtor of the United States in terms that 
inform the debtor of the consequences of failing to cooperate with the 
agency to resolve the debt. The specific content, timing, and number of 
demand letters shall depend upon the type and amount of the debt and the 
debtor's response, if any, to the agency's letters or telephone calls. 
Generally, one demand letter should suffice. In determining the timing 
of the demand letter(s), agencies should give due regard to the need to 
refer debts promptly to the Department of Justice for litigation, in 
accordance with Sec. 904.1 of this chapter or otherwise. When necessary 
to protect the Government's interest (for example, to prevent the 
running of a statute of limitations), written demand may be preceded by 
other appropriate actions under parts 900-904 of this chapter, including 
immediate referral for litigation.
    (b) Demand letters shall inform the debtor of:
    (1) The basis for the indebtedness and the rights, if any, the 
debtor may have to seek review within the agency;
    (2) The applicable standards for imposing any interest, penalties, 
or administrative costs;
    (3) The date by which payment should be made to avoid late charges 
(i.e. interest, penalties, and administrative costs) and enforced 
collection, which generally should not be more than 30 days from the 
date that the demand letter is mailed or hand-delivered; and
    (4) The name, address, and phone number of a contact person or 
office within the agency.
    (c) Agencies should exercise care to ensure that demand letters are 
mailed or hand-delivered on the same day that they are dated. There is 
no prescribed format for demand letters. Agencies should utilize demand 
letters and procedures that will lead to the earliest practicable 
determination of whether the debt can be resolved administratively or 
must be referred for litigation.
    (d) Agencies should include in demand letters such items as the 
agency's willingness to discuss alternative methods of payment; its 
policies with respect to the use of credit bureaus, debt collection 
centers, and collection agencies; the agency's remedies to enforce 
payment of the debt (including assessment of interest, administrative 
costs and penalties, administrative garnishment, the use of collection 
agencies, Federal salary offset, tax refund offset, administrative 
offset, and litigation); the requirement that any debt delinquent for 
more than 180 days be transferred to the Department of the Treasury for 
collection; and, depending on applicable statutory authority, the 
debtor's entitlement to consideration of a waiver.
    (e) Agencies should respond promptly to communications from debtors, 
within 30 days whenever feasible, and should advise debtors who dispute 
debts to furnish available evidence to support their contentions.
    (f) Prior to the initiation of the demand process or at any time 
during or after completion of the demand process, if an agency 
determines to pursue, or is required to pursue, offset, the procedures 
applicable to offset should be followed (see Sec. 901.3). The 
availability of funds or money for debt satisfaction by offset and the 
agency's determination to pursue collection by offset shall release the 
agency from the necessity of further compliance with paragraphs (a), 
(b), (c), and (d) of this section.
    (g) Prior to referring a debt for litigation, agencies should advise 
each person determined to be liable for the debt that, unless the debt 
can be collected administratively, litigation may be initiated. This 
notification should

[[Page 1337]]

comply with Executive Order 12988 (3 CFR, 1996 Comp., pp. 157-163) and 
may be given as part of a demand letter under paragraph (b) of this 
section or in a separate document. Litigation counsel for the Government 
should be advised that this notice has been given.
    (h) When an agency learns that a bankruptcy petition has been filed 
with respect to a debtor, before proceeding with further collection 
action, the agency should immediately seek legal advice from its agency 
counsel concerning the impact of the Bankruptcy Code on any pending or 
contemplated collection activities. Unless the agency determines that 
the automatic stay imposed at the time of filing pursuant to 11 U.S.C. 
362 has been lifted or is no longer in effect, in most cases collection 
activity against the debtor should stop immediately.
    (1) After seeking legal advice, a proof of claim should be filed in 
most cases with the bankruptcy court or the Trustee. Agencies should 
refer to the provisions of 11 U.S.C. 106 relating to the consequences on 
sovereign immunity of filing a proof of claim.
    (2) If the agency is a secured creditor, it may seek relief from the 
automatic stay regarding its security, subject to the provisions and 
requirements of 11 U.S.C. 362.
    (3) Offset is stayed in most cases by the automatic stay. However, 
agencies should seek legal advice from their agency counsel to determine 
whether their payments to the debtor and payments of other agencies 
available for offset may be frozen by the agency until relief from the 
automatic stay can be obtained from the bankruptcy court. Agencies also 
should seek legal advice from their agency counsel to determine whether 
recoupment is available.