[Code of Federal Regulations]
[Title 7, Volume 14]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1956.147]

[Page 269-270]
 
                          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. 1956.147  Debt settlement under the Federal Claims Collection Act.

    The U.S. Department of Justice (DOJ) and the General Accounting 
Office are charged with the responsibility for implementing the Federal 
Claims Collection Act and have promulgated the Federal Claims Collection 
Act Joint Standards (FCCAJS) (4 CFR parts 101-105) to inform Government 
Agencies on how to settle debts and claims which the Agency does not 
have independent statutory authority to settle. With the exception of 
loans and claims with outstanding balances of $20,000 or less, exclusive 
of interest, penalties, and administrative costs, settlements must be 
submitted to and approved by the United States Attorney or the DOJ. Debt 
Settlement of Economic Opportunity Cooperative loans, Claims Against 
Third Party Converters, Nonprogram loans, Industrial Development Grants, 
Rural Development Loan Fund loans, Intermediary Relending Program loans, 
Nonprofit National Corporations Loans and Grants, Indian Tribal Land 
Acquisition Loans (to the extent settlement cannot be effected pursuant 
to Sec. 1956.137), and 601 Energy Impact Assistance Grants are programs 
that must be settled under the FCCAJS.
    (a) Debt settlement of the subject loans and claims falls in the 
following categories:
    (1) Settlement of loans and claims may be approved by the 
Administrator when the outstanding balance of the indebtedness involved 
in the settlement in $20,000 or less, exclusive of interest, penalties, 
and administrative costs. These loans and claims will be submitted to 
the National Office on Form FmHA or its successor agency under Public 
Law 103-354 1956-1, ``Application for Settlement of Indebtedness,'' for 
debt settlement. Subsequent to approval, Form FmHA or its successor 
agency under Public Law 103-354 1956-1 will be distributed in accordance 
with the Forms Manual Insert (FMI).
    (2) Loans and claims with an outstanding balance of $200,000 or less 
inclusive of interest, penalties, and administrative costs, but with an 
outstanding balance greater than $20,000, exclusive of interest, 
penalties, and administrative costs, after approval by the State 
Director will be referred to your Regional Office of the General Counsel 
(OGC) for referral to the United States Attorney in whose judicial 
district the debtor can be found. The form to be used is the Claims 
Collection Litigation Report (CCLR). This form should be available 
through the U.S. Attorney. A memorandum from the State Director should 
be attached to the CCLR recommending acceptance of the debt settlement. 
If the State Director after reviewing the CCLR does not recommend 
acceptance, the State Director has the authority to reject the debt 
settlement.
    (3) Loans and claims with an outstanding balance over $200,000, 
inclusive of interest, penalties, and administrative costs, will be 
referred to the Administrator and will include the following:
    (i) The case file(s).
    (ii) A completed CCLR.
    (iii) Copies of the notes, security agreements, and mortgages.
    (iv) A current appraisal of any security owned by the debtor.
    (v) A narrative which will include:
    (A) Recommendation for the acceptance of the debt settlement.
    (B) The type of loan involved, a short history of the loan, and why 
the debtor failed.
    (C) Steps taken to collect the loan(s).
    (D) An analysis of the debtor's future repayment ability. This 
should discuss if the debtor has any other assets or has concealed or 
improperly transferred assets, if known. If the debtor is an individual, 
this should include consideration of the debtor's present and potential 
income and inheritance prospects.
    (E) Why acceptance of the debt settlement offer is in the best 
interest of the Government.
    (4) If the Administrator concurs with the recommendation for the 
debt settlement, it will be referred by the

[[Page 270]]

FmHA or its successor agency under Public Law 103-354 National Office to 
OGC for referral to the Commercial Litigation Branch, Civil Division, 
U.S. Department of Justice, Washington, DC 20530.
    (b) When a debtor has a Community Programs or Business and Industry 
loans(s) and defined in this subpart, these loan(s) will be debt settled 
under the authority of the Consolidated Farm and Rural Development Act. 
In such cases, the subject loans and claims should be listed under part 
II(B) on Form FmHA or its successor agency under Public Law 103-354 
1956-1, as other debts owed FmHA or its successor agency under Public 
Law 103-354. Normally, all the security for the subject loans and claims 
should be disposed of prior to the submission for debt settlement.
    (c) It is not necessary to obtain approval of the United States 
Attorney or the DOJ (as the case may be) in cases where FmHA or its 
successor agency under Public Law 103-354 decides not to settle a loan 
or claim.

[55 FR 30197, July 25, 1990, as amended at 59 FR 46162, Sept. 7, 1994]