[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: 31CFR903.3]



[Page 971-972]

 

                  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 972]]



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.