Terminating

1
Terminating Suspending Collection
WHY DO AGENCIES TERMINATE OR SUSPEND COLLECTION
ACTION?

• Federal law (31 U.S.C. 3711 and 31 CFR Parts
  900-904)
• requires that agencies try to collect debts owed
  to the Federal government (this is known as an
  agencys affirmative duty to collect their
  debts)
• authorizes agencies to suspend or terminate
  collection action and
• states that agencies act under their own
  regulations and standards promulgated in
  accordance with regulations issued by the
  Departments of Justice and the Treasury (also
  known as the Federal Claims Collection Standards
  (FCCS)).
• In summary, agencies have an affirmative duty to
  collect their delinquent debts. They may be
  relieved of this duty by terminating or
  suspending collection action under standards
  provided for in the FCCS and their own agency
  regulations.
• The decision to terminate or suspend collection
  action must be clearly made, and must be
  justifiable under established standards.

2
Terminating and Suspending Collection -
Definitions

• WHAT DO TERMINATION AND SUSPENSION MEAN?
• Termination of collection action means ceasing
  active collection on a debt. When an agency
  terminates collection on a debt, it does not
  intend to pursue active collection at a later
  time.
• Suspension of collection action means temporarily
  ceasing active collection on a debt.
• Active collection means the debt is being
  collected using all appropriate debt collection
  remedies (such as demand letters, credit bureau
  reporting, garnishment, litigation, foreclosure,
  and cross-servicing with the Financial Management
  Service.
• Note When an agency terminates or suspends
  collection action, it may continue passive
  collection action if such action is not
  prohibited by law and is appropriate. Passive
  collection action includes maintaining a lien on
  collateral securing the debt without taking
  action to liquidate the collateral or referring
  the debt to the Treasury Offset Program (TOP) or
  scheduling the debt for sale through an asset
  sales program.

3
Terminating Suspending Collection

• WHEN SHOULD AN AGENCY TERMINATE OR SUSPEND
  COLLECTION ACTION?
• The general rule is that the agency should
  terminate or suspend collection action on a
  debt when it is either not economically
  worthwhile to continue collection action on the
  debt, or collection action is otherwise
  inappropriate.
• There is an exception to the general rule when
  a significant enforcement policy is involved or
  recovery of a judgment is a prerequisite to
  imposition of administrative sanctions, it is
  inappropriate to terminate or suspend collection
  action.
• There are specific criteria in the Federal
  Claims Collection Standards to help agencies
  evaluate when to terminate or suspend collection
  action.

4
Terminating Collection
Under the FCCS, agencies may terminate collection
action when

• The agency is unable to collect any substantial
  amount through its own efforts or the efforts of
  others, including the consideration of the
  present and future financial condition of the
  debtor.
• The agency is unable to locate the debtor.
• The cost of collection is anticipated to exceed
  amount collected.
• The debt is legally without merit. This means
  the debt was never owed in the first place and
  should not have been classified as a debt.
• Enforcement of all appropriate debt collection
  tools (such as offset, administrative wage
  garnishment and litigation) is barred by
  statute(s) of limitations.
• The debt cannot be substantiated, that is, there
  is insufficient witnesses, evidence or
  documentation to validate the debt and the debtor
  will not sign a repayment agreement.
• The debt owed by the debtor has been discharged
  in bankruptcy.

5
Terminating Collection DOJ Concurrence
WHEN DOES AN AGENCY NEED THE CONCURRENCE OF THE
DEPARTMENT OF JUSTICE (DOJ) TO TERMINATE
COLLECTION ACTION?

• Generally, DOJ concurrence is required to
  terminate active collection on debts with
  principal amounts greater than 100,000 unless
  there is an exemption to this requirement.
• When an agency has a debt arising from fraud,
  false statements, or misrepresentation by the
  debtor, the agency must ask DOJ for authority to
  terminate or suspend collection action regardless
  of the amount.
• Note Treasury has been authorized by DOJ to
  approve termination of collection on debts of
  500,000 or less that have been referred to FMS
  for cross-servicing.

6
Terminating Suspending Collection
WHAT ARE THE EXECEPTIONS TO THE REQUIREMENT TO
OBTAIN DOJ CONCURRENCE?

• The agency has independent litigating authority.
• The debt has been referred to DOJ for litigation.
• The debt has been discharged in bankruptcy.
• The statute of limitations for litigation has
  run.
• The agency has determined that the debt is
  legally without merit or cannot be substantiated.

7
Terminating Suspending Collection
DOJ Concurrence not required for write-off.

• DOJ concurrence not required to write-off debts,
  because write-off is a concept different from
  termination of collection action and is done
  under different rules.

8
Terminating Collection DOJ Concurrence
HOW DOES AN AGENCY REQUEST CONCURRENCE FROM DOJ?

• To request DOJ concurrence submit a completed
  Claims Collection Litigation Report (CCLR) to
• Department of Justice
• Civil Division, Commercial Litigation Branch
• 1100 L Street NW, Room 10057
• Washington, DC 20530
• The CCLR can be found at Appendix 7 of Chapter 7
  of Managing Federal Receivables and on FMS
  website at www.fms.treas.gov/debt.

9
Suspension of Collection - Criteria
WHEN IS SUSPENSION OF COLLECTION ACTION
APPROPRIATE? An agency may suspend collection
action on a debt if any of the following apply

• The agency cannot locate the debtor at the
  present time.
• Though the debtor currently may not be able to
  pay anything or have any assets from which to
  collect the debt, the debtors financial
  condition is expected to improve.
• The debtor has requested a waiver or
  administrative review of the debt.
• The debtor has filed for bankruptcy. In most
  cases, the automatic stay in bankruptcy applies.

10
Suspension of Collection DOJ Concurrence
WHEN IS DOJ CONCURRENCE NEEDED TO SUSPEND
COLLECTION ACTION ON A DEBT?

• DOJ concurrence is required to suspend collection
  on debts whose principal amounts exceed 100,000.
• When an agency has a debt arising from fraud,
  false statements, or misrepresentation by the
  debtor, the agency must ask DOJ for authority to
  suspend collection action regardless of the
  amount.
• DOJ concurrence is not required if any of the
  following apply
• The agency has independent litigating authority.
• A statute requires suspension of collection
  action.
• The debtor has filed for bankruptcy.

11
Terminating Suspending Collection

• Attention Students!
• You have learned the rules for terminating
  and suspending collection action.
• CONGRATULATIONS - You are now
  Terminators.
• It is now time to learn more about write-off.
• PROCEED TO MY NEXT PART BY CLICKING ON THE ARROW!