[Code of Federal Regulations]
[Title 41, Volume 3]
[Revised as of July 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 41CFR105-55.020]

[Page 413-414]
 
           TITLE 41--PUBLIC CONTRACTS AND PROPERTY MANAGEMENT
 
              CHAPTER 105--GENERAL SERVICES ADMINISTRATION
 
PART 105-55_COLLECTION OF CLAIMS OWED THE UNITED STATES--Table of Contents
 
Sec. 105-55.020  Bases for compromise.

    (a) The General Services Administration (GSA) may compromise a debt 
if the full amount cannot be collected because--
    (1) The debtor is unable to pay the full amount in a reasonable 
time, as verified through credit reports or other financial information.
    (2) GSA is unable to collect the debt in full within a reasonable 
time by enforced collection proceedings.
    (3) The cost of collecting the debt does not justify the enforced 
collection of the full amount.
    (4) There is significant doubt concerning the Government's ability 
to prove its case in court.
    (b) In determining the debtor's inability to pay, GSA will consider 
relevant factors such as the following:
    (1) Age and health of the debtor.
    (2) Present and potential income.
    (3) Inheritance prospects.
    (4) The possibility that assets have been concealed or improperly 
transferred by the debtor.
    (5) The availability of assets or income that may be realized by 
enforced collection proceedings.
    (c) GSA will verify the debtor's claim of inability to pay by using 
a credit report and other financial information as provided in paragraph 
(g) of this section. GSA will consider the applicable exemptions 
available to the debtor under State and Federal law in determining the 
Government's ability to enforce collection. GSA also may consider 
uncertainty as to the price that collateral or other property will bring 
at a forced sale in determining the Government's ability to enforce 
collection. A compromise effected under this section will be for an 
amount that bears a reasonable relation to the amount that can be 
recovered by enforced collection procedures, with regard to the 
exemptions available to the debtor and the time that collection will 
take.
    (d) If there is significant doubt concerning the Government's 
ability to prove its case in court for the full amount claimed, either 
because of the legal issues involved or because of a bona fide dispute 
as to the facts, then the amount accepted in compromise of such cases 
will fairly reflect the probabilities of successful prosecution to 
judgment, with due regard given to the availability of witnesses and 
other evidentiary support for the Government's claim. In determining the 
litigative risks involved, GSA will consider the probable amount of 
court costs and attorney fees pursuant to the Equal Access to Justice 
Act, 28 U.S.C. 2412 that may be imposed against the Government if it is 
unsuccessful in litigation.
    (e) GSA may compromise a debt if the cost of collecting the debt 
does not justify the enforced collection of the full amount. The amount 
accepted in compromise in such cases may reflect

[[Page 414]]

an appropriate discount for the administrative and litigative costs of 
collection, with consideration given to the time it will take to effect 
collection. Collection costs may be a substantial factor in the 
settlement of small debts. In determining whether the cost of collection 
justifies enforced collection of the full amount, GSA will consider 
whether continued collection of the debt, regardless of cost, is 
necessary to further an enforcement principle, such as the Government's 
willingness to pursue aggressively defaulting and uncooperative debtors.
    (f) GSA generally will not accept compromises payable in 
installments. This is not an advantageous form of compromise in terms of 
time and administrative expense. If, however, payment of a compromise in 
installments is necessary, GSA will obtain a legally enforceable written 
agreement providing that, in the event of default, the full original 
principal balance of the debt prior to compromise, less sums paid 
thereon, is reinstated. Whenever possible, GSA will obtain security for 
repayment in the manner set forth in Sec. 105-55.015.
    (g) To assess the merits of a compromise offer based in whole or in 
part on the debtor's inability to pay the full amount of a debt within a 
reasonable time, GSA may obtain a current financial statement from the 
debtor, executed under penalty of perjury, showing the debtor's assets, 
liabilities, income and expenses. GSA also may obtain credit reports or 
other financial information to assess compromise offers. GSA may use 
their own financial information form or may request suitable forms from 
the Department of Justice or the local United States Attorney's Office.