[Code of Federal Regulations]

[Title 31, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 31CFR901.2]



[Page 960-961]

 

                  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 961]]



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.