M29-1, Part 11\
January 30, 1974 Change 11

CONTENTS

CHAPTER 11. LIENS

PAGE

PARAGRAPH

SUBCHAPTER i ON-TAPE LIENS\
11.01 General 11-1\
11.02 Establishment of Liens 11 - 1\
11.03 Initial Lien Letter 11-3\
11.04 Initial Lien Letter Returned as Undeliverable 11-3\
11.05 Follow-up Actions on Unpaid Liens 11\
11.06 Lien Interest 114\
11.07 Non-Interest-Bearing Liens 11-5\
11.08 suspension of Collection Actions 11-5\
11.09 Disposition of Liens After Final Lapse Action 11-5

. SUBCHAPTER 2. OFF-TAPE LIENS\
11.10 General 11-6

11.11 Establishment of Off-Tape Liens on Active Accounts 11-7\
11.12 Follow-up Actions 11-8\
11.13 Posting Procedure 11-8\
11.14 Disposition of Liens After Final Lapse Action ll-10\
11.15 Waiver of Certain Overpayments 11-10\
11.1 6 Write off of Certain Administrative Liens 11 - 11

•

11-i

September 13,1976 M29-1, Part\
Change 13

CHAPTER 11. LIENS

SUBCHAPTER 1. ON-TAPE LIENS

11.01 GENERAL

a\. Administrative liens are established for premium and insurance
overpayment indebtedness under the conditions outlined in M29-l, part I,
chapter 9.

b\. Premium and insurance overpayment liens on active insurance accounts
are maintained on the master record with the exception of 304, 305, 306
statutory liens. Payments are applied and receipts are released by the
system. Action to compute and release bills for annual interest is also
accomplished by the system. However, not more than one lien can be
maintained on the master record at one time. When a lien on tape is
liquidated and the master record indicates there is other indebtedness,
the system will generate a record printout, reason code 085, for
clerical insertion of the off-tape lien.

\[c. In any case when the insurance is in force no effort will be made
to determine whether the 1948 and/or 1951 dividend has been paid or if
the amount paid was correct. This includes cases when terminal actions
are being taken; i.e., death cases, cash surrenders, matured endowments.

d\. No receivable or lien will be established if at the time of an audit
the date of discovery of an overpayment is 6 years or more after the
date of payment regardless of the dividend year involved.

e\. Outstanding liens established prior to this change in policy when
the overpayment cannot be identified by documentary proof, such as a
photocopy of a canceled check, and satisfactory arrangements to recover
the overpayment have not been completed, may be written off without any
further notice to the insured. The reason for the write-off will be
given as uncollectible, not legally supportable.

11.02 ESTABLISHMENT OF LIENS

a\. A premium lien is established only if the policy on which the
indebtedness rose is active. If a premium lien arises on an inactive
account, the insurance folder will be flashed to show an indebtedness
does exist but a lien account will not be established.

b\. If the insurance overpayment indebtedness lien is less than \$1, or
if the premium indebtedness lien is less than \$1 and does not equal or
exceed 90 percent of a monthly premium:

\(1\) Prepare VA Form 29-5899, Request for Record Print Out, or VA Form
29-8529, RPO/Reinstatement/Status.

\(2\) Examine the RPO to determine status of the policy. If there is no
lien on the master record, enter all data pertinent to the lien in the
lien segment of the RPO, including the authority and reason for
establishment.

\(3\) Prepare VA Form 29-5894a, Optional Segment Input Card, or VA Form
29-8525, Dividend/Loan/Lien, transaction type 006, to insert the lien in
the master record.

\(4\) Prepare other input documents to credit account(s) on which the
lien arose, if the account cannot be credited on the document inserting
the lien.

\(5\) Prepare VA Form 29-5894a or 29-8525, transaction type 086, to
delete the lien and transfer the amount to the variance account.

NOTE: Steps (3), (4) and (5) are accomplished for accounting purposes
only.

11-1

September 13,1976 M29-1, part II\
Change 13

\(2\) Prepare and attach VA Form 29-320, Request for Calculation, if
appropriate, to the RPO requesting recalculation of the amount and
period of extended insurance. Upon return of the forms, prepare a
corrected VA Form 29-389c, Notice of Extended Term Insurance.

\(3\) Prepare the necessary input documents to adjust the master record:

\(a\) VA Form 29-5892a, Policy Input, or VA Form 29-8522, Policy,
transaction type 082, will be prepared to reduce the amount of extended
insurance.

\(b\) VA Form 29-5892a or 29-8522, transaction type 072, will be
prepared when no pure endowment is payable, to change the date on which
extended insurance will expire.

11-2a

January 10, 1972 M29-1, Part II\
Change 5

\(c\) VA Form 29-5893a, Premium Input, or VA Form 29-8523, Premium/TDIP,
transaction type 083, will be prepared when it is necessary to remove or
reduce the amount of pure endowment payable; or credit the premium
offset account when that is the account on which the lien arose; or to
debit account 33 and credit account 39 for the amount needed to repay
the lien.

\(d\) VA Form 29-5894a or 29-8525, transaction type 006, will be
prepared to insert the lien on t d if possible at the same time, to
credit the account on which the lien arose.

\(e\) VA Form 29-5894a or 29-8525, transaction type 086, will be
prepared to repay the lien from reserve.

\(f\) VA Form 29-5897a, Accounting Control Input Card, or VA Form
29-8527, Accounting Control, transaction type 089, will be prepared to
debit account 33 and credit account 39 for the amount of the lien, when
that action could not be taken on VA Form 29-5893a, or to credit the
account on which the lien arose, when that action could not be taken on
another input document.

\(g\) VA Form 29-5895a, Pending Transaction Input Card, or VA Form
29-8526, Pending Transaction, transaction type 098, will be prepared to
delete a pending transaction for pure endowment dividends, if there is
one on tape.

\(h\) VA Form 29-5895a or 29-8526, transaction type 008, will be
prepared to reinsert a pending transaction for dividends which may
become due on a reduced amount of pure endowment, if any.

NOTE: When a recomputation of extended insurance is made to pay a lien
which occurred prior to the date of lapse, an overpayment of dividend
may result due to the reduced amount of ex tended insurance. The amount
of this lien will be inserted in the master record in accordance with
procedure as outlined in this chapter.

\(4\) Route insurance folder with all forms attached to the Voucher
Audit Unit for review of action taken and\
r to the Correspondence Clerk for release of a dictated letter and
corrected VA Form 29-389 c to the insured.

11.03 INITIAL LIEN LETTER

The initial lien letter to the insured will be composed to suit the
individual case. Using the following guidelines, the letter will
include:

a\. How and when the indebtedness occurred and the necessity for
immediate repayment in full or in partial payments.

b\. It will explain that he may authorize the use of all or part of any
existing credits toward repayment of the indebtedness. If the dividend
option is credit, care should be taken to make sure that the insured is
not encouraged to change the option and that it will be to his advantage
to repay the indebtedness as soon as possible to avoid interest charges.
The insured will also be advised that if the indebtedness is not repaid,
it will be deducted from any future dividends or at time of settlement.

NOTE: No mention will be made of the 1-year interest-free period or the
rate of interest.

11 .04 INITIAL LIEN LETTER RETURNED AS UNDELIVERABLE

Upon receipt of the initial lien letter returned unclaimed, with RPO and
insurance folder attached, action will be taken in accordance with the
following:

a\. If address on letter is different from that on RPO, remain letter to
address on RPO and prepare the following input documents:

\(1\) VA Form 29-5894a or 29-8525, transaction type 086, to change the
effective date of the lien.

11-3

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. Septepte\~\~r30,1977 M29C)L1an\~P\~\\L4if

lien *when* a Policy matures fl ty 20 da ys after the lien annivers
date, interest *Will* be comPuted f the

ersa,y date to the mature\~\~\~te on the lien Prior to ation.\
***11.07** NONiNTERE* caP\~t\~jza,y

,oSepte\~i\~)ie\$\$wR1\~tei\~\~rreeesd\~\$tb:e\~\~j;\~\~\~\~)RIst\~\~e\~\~EN\~\~\~on
chaon)eDs\$%ciaioten, 5nrom
Bene4ton\$\~ymcue\~7n\~tf\~;\~oonttmh\~t\~\~s\~o\~

intewhen deducl\~hed correct, All

the liens *will* \~(1\~\~\~interest\~beafln

b\. If a n lien in the ma record and anothe afing lie fl is

combined and is ma\~\~rrecord \\1 ing ve date.

din the st effecti

be PrePa nder the

e\~ir non\~interes t\~be• established

which they \~0randu\~ will be f\~iled the insuranamount

c\. A me \~e\~0randum red stating of lien and the uA

se. The will clearly m the ce folder. each circu\~stances nuer

**11.08** SUS\~\~N\~ION OF COLLECTION ACTIONS

may and/or active be not in5\~i:\~\~\~n\~C\~ have the
m\~i\~\~\~;iPa\~rs:9b0e\$vaup most by setoff fr?\~
proef1ucnie(\~\~cdciliviedcetine:lns

outlinedCted the near future\~ Pt. I, ch 9 ity to reco Pati

un\~\~ settle ParagraPhs *11.03* anbdut *the* nd 9.08.)

***11.05*** hanv5e been ta\~ailable at time ent. Theref0 ement,
collection action should be suspended gardle55 evident th

reen and it is of set\~e\~n\~

**11.09** DI5PO51TION OF LIE

havebeliensonall\~\~V\~\~NSAFTER

*FINAL LAPSE ACTION* 0\~the debt. will not be

a\. ance nd \~ta0uWned in urance acco he amount at the debt re, after
the

the Fin en made as inactive ins unt5 are considered as After the u su\~
collecti

ProCessingP\~f\~a\~5\~0Pnhs *l l \~03* and *l l **.05, ***the llection
of these debts is the re\~p0n0.n efforts

indebted ded on Per Plan c0Lnietnrasctsis usually rec

sibilltv\~\~

sferred to the F on lapsed ter 0v\~ereqYfr0\~ e rese\~e at

under the transfer inance and Data

-accounts (h\
\~***vi\~\~w\
***Paid l) on w\
cessing\
c. The of o I\'m\
ion apse

having a re\~t::n::0n;s as receivables will also be made t e

following Co 0ff\~tape lie th Finance *7*Uata cess\~g Thvision

*(l)* Th0se articipating Policy on tape.

Poh\~c)\~. liens on \`)efinanent Plan Policies that are no l0nger on
tape, nor is there a related act

ive, Participating

following to delete the Is lapse tra\~n5ieesystem

d\. On a \~uarterjy b\~ae\\ after final action on term accounts will
Provide

from the automatic\~1y

\~i ,m\~s;,e5record and effect the th r.

for the

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ty\~ranpineancoe\~\~\~ndgem\~\~\~\$

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I\~ens\~Offsets \~ransaction be win a t

\(07\) and a debit to Writeo\~ lie ns (42). interest on the the lien
5hno0 i o cy

5\~Policy d liens *will* t be credo\
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N29-1, Part IT

Advance Manual Change No. 1-85 April 24, 1985

[CHAPTER Il.]{.underline} %TFNS

A. [CHANGE:]{.underline} M29-1, Part Il, Chapter 11. This change is
issued to provide\
procedures for the establ\~shitent and maintenance of off-tape\
liens that involve the recovery of five and eleven percent loan\
overpayinents. It also directs supervisory personnel to review\
the estabJish\~ent of off-tape liens and to take appropriate\
remedial action when necessary.

B. PROCEDURE: Page 11-6\~ delete subpar\~graph 11.10 in its entirety an?
substitute the attached rep1\~ce\~ert.

Page 11-7 and 11-8\~ delete subparagraph 11.11 in its ertirc-ty and
substitute the attached replaceuent.

C. NEW OR RFVISEi)

INSURANCE FORbiS: None

OBERT W. CAREY

\$ Assist\~t\'t Director for nsurance

[DISTRIBUTION]{.underline}:

335/29 92\
310/290 51\
310/291 111\
310/Library 1\
203/SDA 2\
CO/311D 2

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i1.IC CFNRRAL

a\. A record of the off-tape lien Bill be established and
\~aintci\'ine\~ or 8 VA Forw 29-1696, Lien Record Card. Off-tape lien
accounts will be establis1ied under the following conditions:

\(I\) A lien segrnent currently exists on the Master Record, and at
additional pre\~iu\~ or insurance overpayment indebtedness is found.

\(2\) The caster Record contains a paid-up addition seginent.

\(3\) A five or eleven percent loan was granted in excess of the
TnaxiTPuT\~ loan value.

b\. The existence of the off-tape lien is recorded on the Master Record
by the insertion of the othei ii\~\~bt\~dr.e\~\~ in\~Iicator.

c\. Al) accounting \~ctior\'s in connection with the off-tape lien are
accomplished outside the system.

d\. An off-tape lien to effect the recovery of a 5 or II percent loan
overpayTrert will be charged an arnual interest rate of 5 or II percent,
whicbevei is appropriate. No prior years adjustment \`will be bade for
interest charged at the 4 percent rate.

\`.

11.11 ESTABLISHMENT OF OFF-TAPE LIENS ON ACTIVE ACCOUNTS

a\. An off-tape lien will not be established if the amount of the
insurance overpayment indebtedness or premium indebtedness is less than
\$1.00. An amount of less than \$1.00 will be off set by the transfer of
funds from the variance account.

b\. If the amount of the overpayment or premium indebtedness is \$1.00
or more, a VA Form 29-1696 will be prepared showing all pertinent inf
ormation and the authority for the lien. Enter the type of lien, PREM,
01PMT, 5 or 11 PERCENT LOAN o\'PMT and appropriate interest rate to be
charged for each lien.

c\. Prepare VA Form 29-1610, Transfer Worksheet, in duplicate. Debit
off-tape lien and credit the appropriate two-digit ADP general ledger
account number.

d\. A lien letter will be released informing the insured of the
overpayment. The letter should be forceful and require that the full
amount of the overpayment be returned in a lump sum.

e\. Except for eleven percent interest bearing liens, the lien effective
date will be the same as lien letter release date.

f\. If the lien was established to effect the recovery of an eleven
percent loan overpayment, the insured will be allowed an interest-free
period of 31 days from the date of the letter if he returns the full
amount of the overpayment. If he does not return the overpayment amount
within the 31-day period, the 11% interest will revert and begin to
accumulate from the effective date of the lien.

g\. A 45-day no freeze diary will be established from the date of the
lien letter. If no response has been received, a second lien letter
should be released. This letter will provide a repayment schedule. The
suggested monthly payment amount will be taken from the table furnished
in M29-1, Part II, Chapter 33.O3H. If the lien is an 11 percent
overpayment lien, the total amount of the 11 percent indebtedness
(on-tape loan plus off-tape lien) will be combined to determine the
monthly repayment amount.

h\. Forward lien record card, input documents, if any, and VA Form
29-1610 to the Voucher Audit Unit if an internal control batch number is
required on input document(s); otherwise send input documents directly
to the Data Processing Center.

i\. Insert Transaction Type 080 to record other indebtedness indicator
on the RPO.

j\. When an insurance account contains both an off-tape lien and an
off-tape loan, the presence of the other indebtedness bit and the 959
diary together on the master record effectively mask the existence of
the off-tape lien. In order to reduce the possibility of overpayment on

w policies with both off-tape lien and off-tape loan indebtedness, the
following control procedures will be followed:

,.

\(1\) The message \"off-tape loan exists\" should be written on all
off-tape lien record cards associated with any file number which has one
or more off-tape loans.

\(2\) A 959 diary, with the diary message \"lien off-tape,1, should be

established for all accounts with both lien and loan indebtedness\
off-tape. The call-up date should be 30 days prior to the lien

anniversary date.

\(3\) Reason Code 959 RP0s will continue to be generated based upon the
off-tape loan and lien diary call-up dates. This will enable us to conf
irm the validity of each diary against the off-tape indebtedness record.
The loan screen or off-tape lien record card should be examined before
the 959 diary is updated. The 959 RPos generated on the lien call-up
date should also prompt lien interest billing.

\(4\) If the off-tape loan indebtedness is liquidated or reinserted into
the master record, the off-tape loan message on the lien record card(s)
should be removed. Likewise, if the off-tape lien indebtedness is
liquidated or inserted into the master record, the off-tape lien message
should be removed from the off-tape loan inquiry screen(s). The
appropriate 959 diary should also be deleted.

k\. If credits are available toward repayment of the lien, prepare
appropriate input document to delete the credits from the master record
and credit account 52. Also, prepare VA Form 29-1610 to debit account

a 52 and credit off-tape liens. If application of credits reduces the
off-tape insurance overpayment lien to less than \$1 and a premium lien
to less than \$1, the off-tape lien clerk must prepare a VA Form 29-1610
to transfer balance to the variance account.

l\. When it is necessary to correct the paid dividend segment on the
master record and establish an off-tape lien, prepare the following:

\(1\) VA Form 29-394, Dividend Transaction Input Card, or VA Form\
29-8528, Paid Dividend/Dividend History, transaction type 646; debit

account 52 and credit the proper dividend fund.

\(2\) VA Form 29-1610; debit policy liens and credit Undistributed
Insurance Disbursements.

\(3\) VA Form 29-1696, making the routine entries, and in addition, show
in the Remarks space, VA Form 29-1610, and date.

m\. All the material will be routed to the youcher Audit Unit for review
and assignment of the appropriate control batch number. The VA Form
29-1696 will be filed in the off-tape lien file in the Miscellaneous
Accounts and Service Unit.

n\. All off-tape lien establishments will be routed through the unit
supervisor for final review. In addition, liens that are established for
amounts in excess of \$250 or for recovery at the 11% annual interest
rate, should be routed through the Office of the Chief, Policy Service
Section, for appropriate remedial action.

M29-1\~Part II\
**January 10\~** 1972 Change 5

11.11 ESTABLISHMENT OF OFF-TAPE LIENS ON ACTWE ACCOUNTS

a\. If insurance overpayment indebtedness is less than **\$1\~ or** if
the premium indebtedness is less than \$1 and does not equal or exceed
90 percent of a monthly premium, and there are no credits available to
reduce or repay the lien, the following action will be taken:

\(I\) Prepare VA Form 29-1610, Transfer Worksheet
(1nterfund/Intrafund)\~ to t sfer the amount of the indebtedness to the
variance account.

( y In the Pending Transactions portion of the RPO, enter amount of
debtedness, how and when it occurr\~ie,and the date the VA Form 29-1610
was prepared. The VA Form 2y6lO will be noted posted.

\(3\) A\~er\~tiie lien has been established and the documents
prepared,,a4eview of the account will be made by an authority hi\~e5
than the Policy Service Technician. The VA Fon\~\~ 29-1610 will be
forwarded to the ADP Unit for scheduling.

\(4\) File RPO in insuTance folder and return folder to file. 7\'

y

b\. If premium indebted\'n\~s is less than \$ 1, but equals,b? exceeds
90 percent of a monthly premium, or if premium (\~r insurance
ov\~\~\~ni\~\~t indebtedness is \$1 or W\~re\~ action will be taken as
follows:

\(l\) Prepare VA Form 9-1 696s\~\~wing all peftinei)t4nformation. Enter
the type of lien, PREM or O\'PMT and the dividend year, if
invo1ved,inthe\~thority for\~\~n block. The VA Form29-1696 will be held
in a 5-workday

hold file. 7

\(2\) In the Pending Transactions portion the RPO, enter the amount of
indebtedness, and the date the VA Form 29-1696 was prepared.

\(3\) If credits are available toward re\~\~ment\'b\~ the lien, prepare
appropriate input document to delete the credits from the master record
and credit account 5- Also, prepare VA Form 29-1610 to debit account 52
and

credit off-tape liens. /7

\(4\) If application of credits re,dbces the off-tape insura ce
overpayment lien to less than \$ l and a premium lien to less than \$ l
and less than \`9-0 percent of a monthly p\"i\':mium, the off-tape lien
clerk must prepare a VA Form 29-1610 to transfer balan,,e\~ to the
variance account.

\(5\) After application of \`credlts, if a premium or insurance ove
ayment lien balance is \$1 or more, or if a premium lien balance is frss
than \$1 but amounts to 90 percent or ore of a monthly premium, route
the insurance folder, with RPO\~ to the Correspondence Clerk for prepar
ion of the lien letter as outlined in paragraph 11.03. The latter will
also include information about the prior lie

\(6\) When the lien letter and folder are returne rom the Correspondence
erk, the lien letter will be dated. A 45-day no-free/e diary will be
established from the ate of the lien letter. Th date of the lien letter
will be entered in the \\Aen Effective Date block on VA Form 9 1696 and
released with han -prepared VA Forms 29-369 and 29.369h.\~The green copy
of the lien letter will be stamped Ready for File and ed in the
insurance folder. The folder wi(i be retumed to file.

\(7\) pare SF 1017-G to transfer the amount of indebtedness from premium
to lien pr cipai.

(8), Prepare VA Form 29-5896a, Life Input, or VA Form 29-8530,
Life/l\'1iscellaneous tran ction type 080, to re o\'rd other
indebtedness on the master record.

9\) Forward lien record card, joumal voucher, input documents, if any,
and VA Form 29-1610, f any, to ADP Control activity through Voucher
Audit Unit if credit on master record is involved; otherwise, se inputs
documents directly to the data processing center.

11-7

January 30, 1974 M29-1,PartII\
Change **11**

\(4\) The notation Int. Free will be entered in the Accumulated Interest
block.

\(5\) A payment in the exact amount of the lien balance will be posted
to lien principal and a zero balance shown on the lien card.

\(6\) When a llen is liquidated, the lien card will be closed out and
the following action taken:

\(a\) Prepare a VA Form 29-5896a or 29-8530\~ transaction type 080, to
delete the Other Indebtedness indicator from the master record.

\(b\) Review all entries on the lien record card, initial, date and file
in the current closed-out lien record card file.

\(c\) After monthly reconciliation, forward lien record card for filing
in the insurance folder. Closed-out lien record cards on XC-cases will
be filed in the Closed XC-File.

b\. Posting to the Lien Record Card

\(l\) VA Form 29-1610 will be received from the ADP Control activity for
posting to the lien record card.

\(2\) When a payment is posted to more than one policy, the form will be
noted to show the amount posted to each policy.

\(3\) The VA Form 29-1610 will be stamped Ready For File, initialed,
dated and filed in the insurance folder.

c\. Processing Uncollectible Checks. Upon receipt of an uncollectible
check, used to pay or reduce the lien

with VA Form 29-5899, take the following action:

\(1\) Post the debit entry to the lien record card.

\(2\) Prepare VA Form 29-348, Debit Slip-Uncollectible Remittance,
showing distribution; note Off-Tape and forward to the ADP Control
activity.

\(3\) Prepare status of lien account on VA Form 3230 and forward, with
the uncollectible check and other material, to the Correspondence Clerk
for a dictated letter.

d\. Posting From Miscellaneous Documents

\(1\) If the transaction was previously vouchered, make posting on the
lien record card.

\(2\) If the transaction has not been previously vouchered, it will be
entered on journal voucher.

e\. Daily Reconciliation\' of Lien Transactions

\(1\) After posting, lien record cards will be retained out of file
until daily reconciliation is effected.

\(2\) Separate tapes will be prepared from the lien record cards on all
debit and credit transactions posted each day. The tapes with posted
documents will be sent to the Control Unit where similar tapes will be
prepared from the documents and reconciled.

NOTE: If the volume is insufficient to warrant a daily reconcillation,
it may be done-on a weekly basis.

11-9

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anuary 30,1974 Change 11

we will take such action as is appropriate under the circumstances,
including withholding any money due you as offsets against your
indebtedness.

11.16 WRITEOFF OF CERTAIN ADMINISTRATWE LIENS

When a lien has been established for an erroneous payment or an
overpayment of a dividend, it will be written off without contacting the
insured, if (1) proof of payment, such as a photocopy of the canceled
check, is not available, and (2) satisfactory arrangements to recover
have not been completed. The reason for the writeoff will be given as:
UNCOLLECTIBLE-NOT LEGALLY SUPPORTABLE.j

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11-11

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