[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: 31CFR903.3]

[Page 1347-1348]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
   CHAPTER IX--FEDERAL CLAIMS COLLECTION STANDARDS (DEPARTMENT OF THE 
                    TREASURY--DEPARTMENT OF JUSTICE)
 
PART 903_STANDARDS FOR SUSPENDING OR TERMINATING COLLECTION ACTIVITY
--Table of Contents
 
Sec. 903.3  Termination of collection activity.

    (a) Agencies may terminate collection activity when:
    (1) The agency is unable to collect any substantial amount through 
its own efforts or through the efforts of others;
    (2) The agency is unable to locate the debtor;
    (3) Costs of collection are anticipated to exceed the amount 
recoverable;
    (4) The debt is legally without merit or enforcement of the debt is 
barred by any applicable statute of limitations;
    (5) The debt cannot be substantiated; or
    (6) The debt against the debtor has been discharged in bankruptcy.
    (b) Before terminating collection activity, the agency should have 
pursued all appropriate means of collection and determined, based upon 
the results of the collection activity, that the debt is uncollectible. 
Termination of collection activity ceases active collection of the debt. 
The termination of collection activity does not preclude the agency from 
retaining a record of the account for purposes of:
    (1) Selling the debt, if the Secretary determines that such sale is 
in the best interests of the United States;
    (2) Pursuing collection at a subsequent date in the event there is a 
change in the debtor's status or a new collection tool becomes 
available;
    (3) Offsetting against future income or assets not available at the 
time of termination of collection activity; or
    (4) Screening future applicants for prior indebtedness.
    (c) Generally, agencies shall terminate collection activity on a 
debt that

[[Page 1348]]

has been discharged in bankruptcy, regardless of the amount. Agencies 
may continue collection activity, however, subject to the provisions of 
the Bankruptcy Code, for any payments provided under a plan of 
reorganization. Offset and recoupment rights may survive the discharge 
of the debtor in bankruptcy and, under some circumstances, claims also 
may survive the discharge. For example, the claims of an agency that it 
is a known creditor of a debtor may survive a discharge if the agency 
did not receive formal notice of the proceedings. Agencies should seek 
legal advice from their agency counsel if they believe they have claims 
or offsets that may survive the discharge of a debtor.