[Federal Register: April 2, 1998 (Volume 63, Number 63)]
[Rules and Regulations]
[Page 16353-16358]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap98-21]

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Part V

Department of the Treasury

_______________________________________________________________________

Fiscal Service

_______________________________________________________________________

31 CFR Part 285

Transfer of Debts to Treasury for Collection; Interim Rule

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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR PART 285

RIN 1510-AA68


Transfer of Debts to Treasury for Collection

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Interim rule with request for comments.

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SUMMARY: The Debt Collection Improvement Act of 1996 (DCIA) requires
Federal agencies to transfer any nontax debt which is over 180 days
delinquent to the Department of the Treasury for debt collection
action; this is known as ``cross-servicing.'' This rule establishes the
procedures and criteria for transferring delinquent debt to the
Department of the Treasury, explains the statutory exceptions to this
requirement, and establishes standards under which the Secretary of the
Treasury will make a determination whether or not to grant exemptions.
This rule also mandates that agencies refer debts to private collection
contractors and to debt collection centers in accordance with
procedures established by the Financial Management Service.

DATES: Effective: April 2, 1998. Comments must be received on or before
May 4, 1998.

ADDRESSES: All comments should be addressed to Gerry Isenberg,
Financial Program Specialist, Debt Management Services, Financial
Management Service, 401 14th Street SW, Room 151, Washington, D.C.
20227. A copy of this rule is being made available for downloading from
the Financial Management Service web site at the following address:
http://www.fms.treas.gov.

FOR FURTHER INFORMATION CONTACT: Gerry Isenberg, Financial Program
Specialist, at (202) 874-6859; or Ellen Neubauer or Ronda Kent, Senior
Attorneys, at (202) 874-6680.

SUPPLEMENTARY INFORMATION:

Background

    Section 31001(m)(1) of the Debt Collection Improvement Act of 1996
(DCIA), Pub. L. 104-134, 110 Stat. 1321-358 (1996), codified at 31
U.S.C. 3711(g), requires Federal agencies to transfer to the Secretary
of the Treasury any nontax debt that has been delinquent for a period
of 180 days. Upon such transfer the Secretary of the Treasury will take
appropriate action to collect or terminate collection action on the
debt. The DCIA lists several exemptions to this requirement. In
addition, the Secretary of the Treasury may exempt any class of debts
from this requirement.
    Under the DCIA, the Secretary of the Treasury is authorized to
prescribe regulations as the Secretary considers necessary to carry out
this requirement. The Financial Management Service (FMS), a bureau of
the Department of the Treasury, is responsible for promulgating the
regulations governing this and other provisions of the DCIA. This rule
describes when a debt must be transferred to the Department of the
Treasury for debt collection action and when a debt will be considered
in an exempt category. This rule explains the relationship between the
requirement to transfer debt to Treasury for debt collection action
(i.e., cross-servicing) and the DCIA requirement, codified at 31 U.S.C.
3716(c), that agencies notify the Secretary of the Treasury of all debt
over 180 days delinquent for purposes of administrative offset. This
rule also describes the factors that the Secretary of the Treasury will
consider in determining whether to exempt a class of debts from the
mandatory provisions of 31 U.S.C. 3711(g).
    The DCIA also authorizes the Secretary of the Treasury to designate
other Federal agencies as debt collection centers and to maintain a
schedule of private collection contractors eligible for referral of
debts owed to the United States. This rule mandates that agencies refer
debts to debt collection centers and to private collection contractors
in accordance with procedures established by the FMS.
    Readers are reminded that most of the provisions of the DCIA became
effective upon enactment on April 26, 1996. FMS is publishing this rule
to clarify and interpret the DCIA provisions pertaining to the referral
of debts to the Department of the Treasury and Treasury-designated debt
collection centers for collection action. However, publication of this
rule does not delay the effective date of the DCIA, nor does it
postpone the duty of Federal agencies to comply with the provisions of
the DCIA.

Section Analysis

(a) Definitions

    The intent of 31 U.S.C. 3711(g) is to centralize the collection of
delinquent debt owed to the Government within Treasury, which has the
authority to designate debt collection centers to administer
centralized collection. Therefore, the definitions in paragraph (a) of
this rule are intended to apply to every Federal agency in the
Government and every entity who owes delinquent nontax debt to the
Federal Government.

(b) General Rule

    Paragraph (b) of this section explains that ``cross-servicing'' is
the term used to refer to the function performed by a Federal agency
that is providing debt collection services for another Federal agency.
Debt collection services may include, but are not limited to, sending
demand letters, telephoning the debtor, and referring the debt for
collection by offset or by a private collection contractor. The
Department of the Treasury and debt collection centers, more fully
described in paragraph (f) of this section, are authorized to perform
cross-servicing.

(c) Mandatory Transfer to FMS

    Paragraph (c)(1) of this section states the general rule that
unless a nontax debt which is over 180 days delinquent falls within one
of the exempt categories listed under paragraph (d) of this section, it
must be transferred to the Financial Management Service (FMS) of the
Department of the Treasury for collection action. For accounting and
reporting purposes, however, the debt remains on the books and records
of the agency which transferred the debt, i.e., the creditor agency.
The terms ``transfer'' and ``refer'' (see paragraph (h), below) as used
in this rule have the same meaning.
    Paragraph (c)(2) of this section describes the actions which FMS
may take relative to a debt which is transferred to FMS under this
paragraph. Paragraph (c)(2) clarifies that FMS will take action upon a
debt in accordance with the statutory and regulatory requirements and
other authorities that apply to that debt or to the particular action
being taken subject to terms and conditions agreed upon, in writing,
between FMS and the creditor agency. Transfer of a debt to FMS does not
change the rights and/or obligations of the debtor. Thus, for example,
if an agency's authority to compromise a certain type of debt is set
forth in a statute or regulation, that statute or regulation would
continue to govern.
    Paragraph (c)(3) of this section describes when a debt will be
considered 180 days delinquent for purposes of mandatory transfer to
FMS. Paragraph (c)(3) recognizes that there are circumstances where 180
days or more has passed from the time a debt is first established as
delinquent on an agency's books and records, but collection action on
that debt may not be appropriate either because there has not been a
final agency determination

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regarding the debt, or there is a legal bar to further collection
action. The 180 day period begins when the creditor agency first
establishes the debt as delinquent and continues to run even though
collection action may be barred. Nevertheless, agencies are not
required to transfer to FMS debts which are over 180 days delinquent
until such time as a final agency determination regarding the debt is
made or the legal bar to further collection action is removed. For
example, agencies are not required to transfer debt where the amount
due is in dispute and the agency has not yet made a final determination
regarding the amount due; where an administrative appeals process is
pending and continued collection action during the appeals process is
prohibited; or where the automatic stay in a bankruptcy proceeding
applies. Once a final agency determination regarding the debt is made
or the legal bar to further collection action is removed, however, the
debt must be immediately transferred to FMS. Agencies are cautioned
that circumstances where an agency's determination regarding a debt is
still pending at the time the debt is 180 days delinquent should
generally exist only where an applicable statute or regulation requires
it. In all other circumstances, agency determinations regarding debts
must be made within reasonable time frames which, absent compelling
circumstances, should not exceed 180 days from the time the debt is
first established.

(d) Exceptions to Mandatory Transfer

    Paragraph (d) of this section describes more fully the exceptions
to mandatory transfer listed in the DCIA. Paragraph (d)(1) lists the
statutory exceptions. Paragraph (d)(2) more fully describes each
exception.
    Under paragraph (d)(2)(i) of this section, a debt is in litigation
only if it has been referred to the Attorney General for litigation or
if proceedings before a court of competent jurisdiction are actually
pending. For debts which have been referred to the Attorney General for
litigation, it is not necessary that court proceedings actually be
pending. For other debts, however, such as debts owed to agencies with
independent litigating authority or those debts which are the subject
of defensive litigation, proceedings before a court must actually be
pending. A debt which has only been referred to agency counsel for
legal review is not considered to be in litigation. Nothing in the DCIA
or in this rule is intended to affect an agency's authority to refer
debts, which are not subject to mandatory transfer to FMS, to the
Attorney General where appropriate.
    Under paragraph (d)(2)(ii) of this section, a debt is in
foreclosure if judicial foreclosure proceedings before a court of
competent jurisdiction are actually pending or a Notice of Default or
comparable action required under applicable law to initiate a
nonjudicial foreclosure proceeding against real or personal property
has been issued. Additionally, for a debt to be considered in
foreclosure it is also necessary that the agency expects to receive
proceeds from the foreclosure which may be applied to the debt.
    Under paragraph (d)(3) of this section, a debt is scheduled for
sale only if it is scheduled to be sold under an established asset
sales program within one year (or longer if approved by the Office of
Management and Budget) from the time it is eligible for sale, that is,
from the time the debt has been approved to be included in an asset
sales program.
    Under paragraph (d)(4) of this section, a debt is at a private
collection contractor only if it has been referred to a private
collection contractor in accordance with paragraph (e) of this section.
    Under paragraph (d)(5) of this section, a debt is at a debt
collection center only if it has been referred to a debt collection
center in accordance with paragraph (f) of this section.
    Under paragraph (d)(6) of this section, a debt is being collected
by internal offset only if an internal offset has been initiated and
the agency expects that the debt will be collected in full within three
years from the date of delinquency. An internal offset will be
considered to have been initiated if funds payable to the debtor by the
creditor agency have been withheld or, in cases where prior notice to
the debtor is required, if such notice has been issued.
    Paragraph (d)(7) of this section sets forth the factors the
Secretary of the Treasury will consider in granting exemptions for
other classes of debts. Generally, the presumption is that an exemption
will not be granted absent compelling circumstances.

(e) Schedule of Private Collection Contractors

    The DCIA requires the Secretary of the Treasury to maintain a
schedule of private collection contractors eligible to receive debts
owed to Federal agencies. FMS and other debt collection centers must
utilize this schedule of contractors when referring debts to a private
collection contractor. Agencies which refer debts which are less than
180 days delinquent to private collection contractors may utilize this
schedule of contractors provided they do so in accordance with
procedures established by FMS. Agencies are not required to use this
schedule of contractors for debts which are less than 180 days
delinquent or for debts which are otherwise exempt from the mandatory
transfer requirement described in paragraph (c) of this section.

(f) Debt Collection Centers

    Paragraph (f) of this section explains that a debt collection
center is a Federal agency designated by the Secretary of the Treasury,
under standards and terms established by the Secretary, to collect
debts owed to the United States. A debt collection center may be an
agency, or a unit or subagency within a Federal agency. Debt collection
centers will take action upon a debt in accordance with the statutory
or regulatory requirements and other authorities that apply to the debt
or to the particular action being taken. Debt collection centers are
authorized, subject to the terms under which the debt collection center
has been designated as such by the Secretary of the Treasury, to take
any action on behalf of the creditor agency to collect, compromise,
suspend or terminate collection action on debts, in accordance with the
terms and conditions set forth, in writing, by the creditor agency. The
action a debt collection center may take is intended to be interpreted
broadly to include actions, such as reporting debts to credit bureaus
and obtaining credit reports, which facilitate collection.

(g) Administrative Offset

    This section explains the relationship between (1) the DCIA
requirement that debts over 180 days delinquent be transferred to
Treasury for collection action (i.e., cross-servicing) and (2) the DCIA
requirement that agencies notify the Secretary of the Treasury of debts
over 180 days delinquent for purposes of administrative offset. Debts
which are transferred to FMS or a Treasury-designated debt collection
center under this rule will, where appropriate, be referred for
collection by administrative offset and agencies are not required to
take any further action to comply with the DCIA requirement regarding
administrative offset. Debts not transferred under this rule, for
example, debts which fall within one of the exempt categories, may
nevertheless be subject to the mandatory offset requirement.

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(h) Voluntary Referral of Debts Less Than 180 Days Delinquent.

    Although agencies are required to transfer debt to FMS which is
more than 180 days delinquent, paragraph (h) of this section is
intended to clarify that agencies may voluntarily refer debt less than
180 days delinquent to FMS, to a private collection contractor in
accordance with paragraph (e) of this section and procedures
established by FMS, or to a debt collection center in accordance with
paragraph (f) of this section and procedures established by FMS. As
noted above, the terms ``transfer'' and ``refer'' as used in this rule
have the same meaning.

(i) Certification

    Paragraph (i) of this section describes the requirement that the
head of an agency or someone with authority to act on behalf of the
head of the agency with regard to debt collection matters, must certify
to FMS or to a debt collection center that debts transferred are valid,
legally enforceable, that there are no legal bars to collection, and
that all due process requirements have been met. This means that the
agency must certify that it has made a final determination that the
debt is due in the amount transferred, that there are no legal bars to
collection such as bankruptcy, and that the agency has provided (or has
arranged to provide) the debtor with notice and an opportunity to be
heard where required as a prerequisite to a particular collection
action. In addition, paragraph (i) explains that the creditor agency is
responsible for notifying FMS of any changes to the status of the legal
enforceability of the debt. For example, unless the creditor agency
determines that the automatic stay imposed at the time of a bankruptcy
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. Therefore, it is imperative that the creditor agency
notify FMS immediately upon learning that a bankruptcy petition has
been filed with respect to a debtor.

(j) Fees

    Paragraph (j) of this section describes the DCIA authority for FMS
and debt collection centers to charge fees, to retain fees from amounts
collected, and to deposit and use fees. Paragraph (j) of this section
also describes the authority for creditor agencies to add these fees to
the amount of the debt.

Regulatory Analysis

    This interim rule is not a significant regulatory action as defined
in Executive Order 12866. Because no notice of proposed rulemaking is
required for this interim rule, the provisions of the Regulatory
Flexibility Act do not apply.

Special Analyses

    FMS is promulgating this interim rule without opportunity for prior
public comment pursuant to the Administrative Procedure Act, 5 U.S.C.
553 (the ``APA''), because FMS has determined, for the following
reasons, that a comment period would be unnecessary, impracticable, and
contrary to the public interest. The DCIA was effective immediately
upon its enactment on April 26, 1996. In implementing the DCIA
provision requiring Federal agencies to transfer debt over 180 days
delinquent to Treasury for debt collection, FMS has identified the need
to provide guidance to Federal agencies. To ensure that this guidance
was provided in a consistent and meaningful manner, FMS has determined
that a rule is desirable.
    Nothing in this rule impacts the rights or obligations of debtors
nor changes the authorities under which Federal agencies collect debt.
This rule provides critical guidance needed to facilitate the ongoing
transfer of debts to Treasury for debt collection. Thus, FMS believes
that it is in the public interest to issue this interim rule without
opportunity for prior public comment.
    The public is invited to submit comments on the interim rule which
will be taken into account before a final rule is issued.
    FMS has determined that good cause exists to make this interim rule
effective upon publication without providing the 30 day period between
publication and the effective date contemplated by 5 U.S.C. 553(d). The
purpose of a delayed effective date is to afford persons affected by a
rule a reasonable time to prepare for compliance. However, in this
case, the requirement to transfer debt to Treasury for debt collection
became effective on April 26, 1996. Inasmuch as this interim rule
provides important guidance that is expected to facilitate full
implementation of the authority contained in the law, FMS believes that
good cause exists to make the rule effective upon publication.

List of Subjects in Part 285

    Administrative Practice and Procedure, Credit, Debt, Loan Programs

Authority and Issuance

    For the reasons set forth in the preamble, 31 CFR part 285 is
amended as follows:

PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION
IMPROVEMENT ACT OF 1996

    1. The authority citation for Part 285 is revised to read as
follows:

    Authority: 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 3716,
3720A; E.O. 13019, 3 CFR, 1996 Comp., p. 216.

    2. Subpart B is added to Part 285 to read as follows:

Subpart B--Authorities Other Than Offset

Sec.
285.11  [Reserved]
285.12  Transfer of debts to Treasury for Debt collection

Subpart B--Authorities Other Than Offset

Sec. 285.11  [Reserved]

Sec. 285.12  Transfer of Debts to Treasury for debt collection.

    (a) Definitions. For purposes of this section:
    Agency means a department, agency, court, court administrative
office, or instrumentality in the executive, judicial, or legislative
branch of the Federal Government, including government corporations.
    Creditor agency means any Federal agency that is owed a debt.
    Debt means any amount of money, funds or property that has been
determined by an appropriate official of the Federal government to be
owed to the United States by a person. As used in this rule, the term
``debt'' does not include debts arising under the Internal Revenue Code
of 1986 or the tariff laws of the United States.
    FMS means the Financial Management Service, a bureau of the
Department of the Treasury.
    Person means an individual, corporation, partnership, association,
organization, State or local government, or any other type of entity
other than a Federal agency.
    Secretary means the Secretary of the Treasury.
    (b) In general. Cross-servicing means that FMS, a Federal agency,
or a unit or subdivision within a Federal agency, under a designation
by the Secretary of the Treasury, is taking appropriate debt collection
action on behalf of one or more Federal agencies or unit or subdivision
thereof. Agencies which provide such cross-servicing are known as debt
collection centers.
    (c) Mandatory transfer of debts to FMS. (1) Except as set forth in
paragraph (d) of this section, a creditor agency shall transfer any
debt that is more than 180 days delinquent to FMS for debt

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collection services. For accounting and reporting purposes, the debt
remains on the books and records of the agency which transferred the
debt.
    (2) On behalf of the creditor agency, FMS will take appropriate
action to collect or compromise the transferred debt, or to suspend or
terminate collection action thereon, in accordance with the statutory
and regulatory requirements and authorities applicable to the debt and
the action. Appropriate action to collect a debt may include referral
to another debt collection center, a private collection contractor, or
the Department of Justice for litigation. The creditor agency shall
advise FMS, in writing, of any specific statutory or regulatory
requirements pertaining to their debt and will agree, in writing, to a
collection strategy which includes parameters for entering into
compromise and repayments agreements with debtors.
    (3) A debt is considered 180 days delinquent for purposes of this
section if it is 180 days past due and is legally enforceable. A debt
is legally enforceable if there has been a final agency determination
that the debt, in the amount stated, is due and there are no legal bars
to collection action. Where, for example, a debt is the subject of a
pending administrative review process required by statute or regulation
and collection action during the review process is prohibited, the debt
is not considered legally enforceable for purposes of mandatory
transfer to FMS and is not to be transferred even if the debt is more
than 180 days past-due. Once there has been a final agency
determination that the debt, in the amount stated, is due and there are
no legal bars to collection action, however, any debt over 180 days
delinquent must be immediately transferred to FMS. Nothing in this
section is intended to impact the date of delinquency of a debt for
other purposes such as for purposes of accruing interest and penalties.
    (d) Exceptions to mandatory transfer. (1) A creditor agency is not
required to transfer a debt to FMS pursuant to paragraph (c)(1) of this
section only during such period of time that the debt:
    (i) Is in litigation or foreclosure as described in paragraph
(d)(2) of this section;
    (ii) Is scheduled for sale as described in paragraph (d)(3) of this
section;
    (iii) Is at a private collection contractor if the debt has been
referred to a private collection contractor in accordance with
paragraph (e) of this section;
    (iv) Is at a debt collection center if the debt has been referred
to a Treasury-designated debt collection center in accordance with
paragraph (f) of this section;
    (v) Is being collected by internal offset as described in paragraph
(d)(4) of this section; or
    (vi) Is covered by an exemption granted by the Secretary as
described in paragraph (d)(5) of this section.
    (2)(i) A debt is in litigation if:
    (A) The debt has been referred to the Attorney General for
litigation by the creditor agency; or
    (B) The debt is the subject of proceedings pending in a court of
competent jurisdiction, including bankruptcy proceedings, whether
initiated by the creditor agency, the debtor, or any other party.
    (ii) A debt is in foreclosure if:
    (A)(1) Collateral securing the debt is the subject of judicial
foreclosure proceedings in a court of competent jurisdiction; or
    (2) Notice has been issued that collateral securing the debt will
be foreclosed upon, liquidated, sold, or otherwise transferred pursuant
to applicable law in a nonjudicial proceeding; and
    (B) The creditor agency anticipates that proceeds will be available
from the liquidation of the collateral for application to the debt.
    (3) A debt is scheduled for sale if:
    (i) The debt will be disposed of under an asset sales program
within one (1) year after becoming eligible for sale; or
    (ii) The debt will be disposed of under an asset sales program and
a schedule established by the creditor agency and approved by the
Director of the Office of Management and Budget.
    (4) A debt is being collected by internal offset if a creditor
agency expects the debt to be collected in full within three (3) years
from the date of delinquency through internal offset. ``Internal
offset'' means withholding of funds payable by the creditor agency to
the debtor to satisfy, in whole or part, the debt owed to the creditor
agency by that debtor.
    (5)(i) Upon the written request of the head of an agency, or as the
Secretary may determine on his/her own initiative, the Secretary may
exempt any class of debts from the application of the requirement
described in paragraph (c)(1) of this section. In determining whether
to exempt a class of debts, the Secretary will determine whether
exemption is in the best interests of the Government after considering
the following factors:
    (A) Whether an exemption is the best means to protect the
government's financial interest, taking into consideration the number,
dollar amount, age and collection rates of the debts for which
exemption is requested;
    (B) Whether the nature of the program under which the delinquencies
have arisen is such that the transfer of such debts would interfere
with program goals; and
    (C) Whether an exemption would be consistent with the purposes of
the Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-134,
110 Stat. 1321-358 (April 26, 1996).
    (ii) Requests for exemptions must clearly identify the class of
debts for which an exemption is sought and must explain how application
of the factors listed above to that class of debts warrants an
exemption.
    (e) Schedule of private collection contractors. FMS will maintain a
schedule of private collection contractors eligible for referral of
debts from FMS, other debt collection centers, and creditor agencies
for collection action. An agency with debt which has not been
transferred to FMS or referred to another debt collection center, for
example, debt that is less than 180 days delinquent, may refer such
debt to a private collection contractor listed on FMS' schedule of
private collection contractors provided they do so in accordance with
procedures established by FMS. Alternatively, an agency may refer debt
that is less than 180 days delinquent to a private collection
contractor pursuant to a contract between the creditor agency and the
private collection contractor, as authorized by law.
    (f) Debt collection centers. A debt collection center is a Federal
agency or a unit or subagency within a Federal agency that has been
designated by the Secretary of the Treasury to collect debt owed to the
United States. FMS is a debt collection center. Debt collection centers
will take action upon a debt in accordance with the statutory or
regulatory requirements and other authorities that apply to the debt or
to the particular action being taken. Debt collection centers may, on
behalf of the creditor agency, subject to the terms under which the
debt collection center has been designated as such by the Secretary,
take any action to collect, compromise, suspend or terminate collection
action on debts in accordance with terms and conditions agreed upon in
writing by the creditor agency and the debt collection center or FMS.
    (g) Administrative offset. As described in paragraph (c) of this
section, under the DCIA agencies are required to transfer all debts
over 180 days delinquent to FMS for purposes of debt collection (i.e.,
cross-servicing). Agencies are also required, under the

[[Page 16358]]

DCIA, to notify the Secretary of all debts over 180 days delinquent for
purposes of administrative offset. Administrative offset is one type of
collection tool used by FMS and Treasury-designated debt collection
centers to collect debts transferred under this section. Thus, by
transferring debt to FMS or to a Treasury-designated debt collection
center under this section, Federal agencies will satisfy the
requirement to notify the Secretary of debts for purposes of
administrative offset and duplicate referrals are not required. A debt
which is not transferred to FMS for purposes of debt collection,
however, such as a debt which falls within one of the exempt categories
listed in paragraph (d) of this section, nevertheless, may be subject
to the DCIA requirement of notification to the Secretary for purposes
of administrative offset.
    (h) Voluntary referral of debts less than 180 days delinquent. A
creditor agency may refer any debt that is less than 180 days
delinquent to FMS or, with the consent of FMS, to a Treasury-designated
debt collection center for debt collection services.
    (i) Certification. Before a debt may be transferred to FMS or
another debt collection center, the head of the creditor agency or his
or her delegatee must certify, in writing, that the debts being
transferred are valid, legally enforceable, and that there are no legal
bars to collection. Creditor agencies must also certify that they have
complied with all prerequisites to a particular collection action under
the laws, regulations or policies applicable to the agency unless the
creditor agency has requested, and FMS has agreed, to do so on the
creditor agency's behalf. The creditor agency shall notify FMS
immediately of any change in the status of the legal enforceability of
the debt, for example, if the creditor agency receives notice that the
debtor has filed for bankruptcy protection.
    (j) Fees. FMS and other debt collection centers may charge fees for
debt collection services. Fees must be based on costs, however, fees
paid to recover amounts owed may not exceed amounts collected. Nothing
in this rule precludes a credit agency from agreeing to pay fees for
debt collection services which are not based on amounts collected. FMS
and debt collection centers are authorized to retain fees from amounts
collected and may deposit and use such fees in accordance with 31
U.S.C. 3711(g). Fees charged by FMS and other debt collection centers
may be added on to the debt as an administrative cost if authorized
under 3717(e).

    Dated: March 25, 1998.
Richard L. Gregg,
Commissioner.
[FR Doc. 98-8453 Filed 4-1-98; 8:45 am]
BILLING CODE 4810-35-P