[Code of Federal Regulations]
[Title 7, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR3.34]

[Page 268-269]
 
                          TITLE 7--AGRICULTURE
 
PART 3_DEBT MANAGEMENT--Table of Contents
 
                        Subpart B_Debt Collection
 
Sec. 3.34  Interest, penalties and administrative costs.

    (a) USDA creditor agencies must attempt to collect interest, 
penalties and administrative costs on any delinquent debts owed to the 
United States in accordance with 4 CFR 102.13 and 102.14, or according 
to written documentation constituting the basis of the debt, or under 
any guidelines issued by the Assistant Secretary for Administration or 
by the creditor agency's fiscal officer.

[[Page 269]]

    (1) Interest will not be assessed on interest, penalties or 
administrative costs. However, if a debtor defaults on a repayment 
agreement, interest which has accrued but was not collected under the 
defaulted agreement will be added to the principal to be paid under a 
new repayment agreement.
    (2) Agencies will assess a penalty of six percent a year on any 
unpaid debt balance delinquent for more than 90 days. This charge 
accrues from the date the debt becomes delinquent.
    (3) Agencies will charge the debtor for administrative costs 
incurred in processing and handling a delinquent debt. Administrative 
costs may include costs of obtaining credit reports, using a private 
debt collector, or selling collateral or property to satisfy the debt.
    (b) Agencies will waive the collection of interest assessed under 
these regulations on a delinquent debt or any portion of that debt which 
is paid within 30 days after the date on which interest began to accrue. 
Agencies may extend the 30-day period on a case-by-case basis, if it is 
determined that an extension is appropriate because of partial or 
complete absence of culpability by the debtor for the delay in payment.
    (c) Agencies may waive collection of all or part of the interest, 
penalties, and administrative costs assessed under these regulations 
when it is determined:
    (1) That the Government cannot collect the full amount of the 
delinquent debt or interest and costs because of the debtor's inability 
to pay the full amount within a reasonable time (considering such 
factors as those listed at 4 CFR 103.2(b)), or the debtor's refusal to 
pay the full amount where the Government is unable to effect collection 
in full within a reasonable time; or
    (2) That there is a real doubt concerning the Government's ability 
to recover interest, penalties or costs in court, either because of the 
legal or equitable issues involved or because the facts are being 
disputed in court; or
    (3) That the cost of collecting the delinquent debt with interest, 
penalties, or costs outweighs the amounts to be recovered; or
    (4) That the collection of some or all of these charges would be 
against equity and good conscience or not in the best interests of the 
United States; or
    (5) (For waiver of interest) that a request is pending for 
reconsideration, administrative review, or waiver of the underlying 
delinquent debt under a statute allowing but not requiring one or more 
of these remedies. If the statute under which review or waiver is sought 
by the debtor prohibits the agency from collecting the delinquent debt 
before resolution of the review or waiver request, interest, penalties 
and administrative costs must be waived during the period in which 
collection action is stayed. Otherwise, interest, penalties and 
administrative costs will not be waived except for a separate reason 
included in this section; or
    (6) (For waiver of interest) that the agency has agreed to a 
repayment plan consistent with 4 CFR 102.11 and with Sec. 3.28 of this 
subpart, there is no indication of fault or lack of good faith by the 
debtor, and the amount of interest is sufficiently large relative to the 
size of the installments reasonably affordable by the debtor that the 
principal debt would never be repaid; or
    (7) The debt is repaid after the date on which interest, penalties 
and administrative costs became payable and the estimated costs of 
recovering the remaining interest balance exceed the amount owed to the 
agency.
    (d) The creditor agency must document its reasons for waiving 
interest, penalties, or administrative costs. This documentation must be 
retained by the agency for at least three years.

[50 FR 7722, Feb. 26, 1985, as amended at 55 FR 38663, Sept. 20, 1990]