Source: https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&mc=true&r=PART&n=pt7.7.761
Timestamp: 2020-07-12 17:16:31
Document Index: 583627117

Matched Legal Cases: ['§761', '§761', '§761', '§761', '§761', '§761', '§761', '§761', 'art 3', 'art 285', 'art 761', 'art 3', 'arts 900', 'art 761', 'art 761', '§3', '§3', '§3', 'art 3', 'arts 900', 'art 3', '§761', 'art 764', 'art 764', 'art 764', 'art 764', 'art 764', 'art 764', 'arts 761', 'art 766', 'art 762', '§761', '§761', '§761']

Subpart F—Farm Loan Programs Debt Settlement
§761.401 Purpose.
§761.402 Abbreviations and definitions.
§761.403 General.
§761.404 Eligibility.
§761.405 Application.
§761.406 Types of debt settlement.
§761.407 Failure to pay.
§761.408 Administrator authority.
(e) Part 3 of this title and 31 CFR part 285 describe the policies and procedures the Agency will follow for non-centralized offset (including administrative offset) and referral to Treasury for centralized offset (TOP), Federal salary offset, Administrative Wage Garnishment, and collection through Treasury's private collection agencies (cross-servicing). Supplemental provisions for FLP purposes are described in part 761, subpart F of this title.
(f) Part 3 of this title and 31 CFR parts 900-904 describe the policies and procedures the Agency will follow for debt settlement authorities pursuant to the Federal Claims Collection Standards. Supplemental provisions for FLP purposes are described in part 761, subpart F of this title.
(g) Part 761, subpart F of this title describes the debt settlement policies and procedures for FLP debt pursuant to the Act.
[72 FR 63285, Nov. 8, 2007, as amended at 76 FR 5057, Jan. 28, 2011; 83 FR 11869, Mar. 19, 2018; 85 FR 36691, June 17, 2020]
ARA Alternative Repayment Agreement.
FCCS Federal Claims Collection Standards.
OIG Office of the Inspector General, USDA.
Adjustment means the settlement of an FLP debt for less than the total amount owed. The adjusted amount is collected through a series of payments that are scheduled over time. An adjustment is not a final settlement until all scheduled payments have been made. After applying all payments pursuant to the adjustment agreement, any remaining balance is canceled. The amount canceled is reported to the IRS pursuant to §3.90 of this title and applicable IRS requirements.
Alternative repayment agreement is a written repayment agreement accepted by both the borrower and the Agency as specified in §§3.42(b) and 3.80 of this title. The agreement may allow for payments to be made from the borrower to the Agency as an alternative to collecting the payment amounts through administrative offset, or Federal salary offset.
Cancellation means the final resolution of an FLP debt without receiving payment in full. Any amounts still owed, after applying payments in accordance with approved adjustment and compromise agreements, is canceled. The amount canceled is reported to the IRS pursuant to §3.90 of this title and applicable IRS requirements.
Debt forgiveness means the reduction or termination of a debt under the Act in a manner that results in a loss to the Agency, through:
(i)(A) Writing down or writing off a debt pursuant to 7 U.S.C. 2001;
(B) Cancellation of remaining amounts owed after compromising, adjusting, reducing, or charging off a debt or claim pursuant to 7 U.S.C. 1981;
(C) Paying a loss pursuant to 7 U.S.C. 2005 on a FLP loan guaranteed by the Agency;
(D) Discharging a debt as a result of bankruptcy; or
(E) Releases of liability which result in a loss to the Agency.
(ii) Debt forgiveness does not include:
(A) Debt reduction through a conservation contract;
(B) Any writedown provided as part of the resolution of a discrimination complaint against the Agency;
(C) Prior debt forgiveness that has been repaid in its entirety;
(D) Consolidation, rescheduling, reamortization, or deferral of a loan; and
(E) Forgiveness of a YL debt due to circumstances beyond the borrower's control.
Hearing official. For the purposes of salary offset, the hearing official is an Administrative Law Judge of the USDA or another individual not under the supervision or control of the USDA. For the purposes of administrative wage garnishment, the hearing official is selected pursuant to part 3, subpart E of this title.
[72 FR 63285, Nov. 8, 2007; 72 FR 74153, Dec. 31, 2007, as amended at 73 FR 74344, Dec. 8, 2008; 75 FR 54012, Sept. 3, 2010; 76 FR 75430, Dec. 2, 2011; 77 FR 15938, May 18, 2012; 78 FR 3834, Jan. 16, 2013; 78 FR 14005, Mar. 4, 2013; 78 FR 65529, Nov. 1, 2013; 79 FR 60743, Oct. 8, 2014; 79 FR 78693, Dec. 31, 2014; 80 FR 74970, Dec. 1, 2015; 81 FR 3292, Jan. 21, 2016; 81 FR 72690, Oct. 21, 2016; 85 FR 36691, June 17, 2020]
Source: 85 FR 36691, June 17, 2020, unless otherwise noted.
(a) This subpart describes the Agency's policies for debt settlement as authorized by the Consolidated Farm and Rural Development Act (CONACT) (7 U.S.C. 1921, 7 U.S.C. 1981, 1981a, 1981d, and 2008h).
(b) FLP debts that cannot be debt settled using CONACT debt settlement authority such as when a borrower has received previous debt forgiveness on another direct loan made under the CONACT, will be processed as specified in 31 U.S.C. chapter 37 and 31 CFR parts 900 through 904.
(a) Abbreviations and definitions for terms used in this subpart are provided in 7 CFR part 3 and §761.2.
(b) Definitions used only in this subpart include:
(1) Third party converter means an individual or entity who:
(i) Is in possession of agency security property, or money from the sale of security, in relation to a loan or other debt that the individual or entity was not liable for; or
(ii) Assists, or participates knowingly or unknowingly, in the transportation or sale of agency security, in relation to a loan or other debt that the individual or entity was not liable for; or
(iii) Assists, or participates knowingly or unknowingly, in temporarily or permanently relocating or concealing the location of agency security property, or money from the sale of agency security, in relation to a loan or other debt that the individual or entity was not liable for.
(a) The Agency will settle debts that result from, except as otherwise specified in this section:
(1)(i) Farm Ownership loans (part 764, subpart D of this chapter), including down payment loans (764, subpart E of this chapter);
(ii) Operating loans (part 764, subpart G of this chapter), including microloans part 764 of this chapter), and youth loans (part 764, subpart H of this chapter);
(iii) Emergency loans (part 764, subpart I of this chapter);
(iv) Conservation loans (part 764, subpart F of this chapter);
(v) Economic Emergency loans (serviced under parts 761 through 767 of this chapter); softwood timber loans; Soil and Water loans; Individual Recreation Loans; Irrigation and Drainage loans; and Shift-in-land-use (Grazing Association) loans;
(2) Costs associated with servicing a borrower's account including, but not limited to, Uniform Commercial Code filing fees, surveys, appraisals, protective advances, and liquidation expenses;
(3) Debts reduced to judgment;
(4) Non-Program Loans;
(5) Amounts the Agency is authorized to recapture through agreements such as the Shared Appreciation Agreement (part 766, subpart E of this chapter);
(6) Loss claims paid on guaranteed loans (part 762 of this chapter);
(7) Unauthorized assistance;
(8) Amounts the Agency may collect from third party converters, or other individuals or entities having possession of security for FLP loans or monies obtained through the sale of FLP loan security; and
(9) Debt returned to the Agency from the Treasury cross-servicing program.
(b) The debtor's signature is not required to process some debt settlement actions. These cases include, but are not limited to, debts discharged in bankruptcy and debts returned from Treasury's cross-servicing program with amounts still owing when no further collection can be taken.
(c) FSA will not engage in settlement of a debt if:
(1) Foreclosure of security has been initiated and is pending with Justice, unless Justice has advised FSA that it does not object to the settlement; or
(2) Debts that have been referred to Justice for a judgment, or a judgement has been obtained by the United States Attorney or Justice, unless Justice closes its file and releases the judgement back to FSA for continued servicing; or
(3) The debtor's account is involved in a fiscal irregularity investigation in which final action has not been taken or the account shows evidence that a shortage may exist and an investigation will be requested; or
(d) The Agency will consider settlement of a debt only when:
(1) All security has been liquidated and the proceeds, less any prior lien amounts, have been applied to the debt; or the Agency received a lump sum payment equal to the security's current market value, less any prior lien amounts, and
(2) Payment is received based on the Agency's determination of the amount the borrower can pay to resolve the remaining balance owed on the unsecured debt.
(3) The lump sum payment made under paragraph (d)(1) of this section for the security's market value may be submitted by the borrower, an individual authorized to act for the borrower pursuant to a power of attorney document or court order, or an individual who is not an obligor on the debt but who has an ownership interest in the security.
(e) If an FLP loan has been accelerated and all security has been liquidated, and the agency has approved an adjustment debt settlement offer in accordance with this subpart, voluntary payments and involuntary payments (such as offsets) will be applied in the following order, as applicable:
(1) Recoverable costs and protective advances plus interest;
(2) Loan principal;
(3) Deferred non-capitalized interest;
(4) Accrued deferred interest; and
(5) Interest accrual to date of payment.
(f) Settlement of FLP debt referred to Treasury's cross-servicing program and returned to the Agency as uncollectible will not be processed for the borrower until all FLP debts referred to the cross-servicing program for that borrower have been returned, with or without payment agreements.
(a) A borrower is eligible for debt settlement if the borrower:
(1) Meets the requirements for the particular type of debt settlement under this part; and
(2) Submits a complete application for debt settlement as specified in §761.405.
(b) All parties liable for the debt must submit a complete application with the following exceptions:
(1) The applicable information required in §761.405 can be provided by the administrator or executor of the Estate, heir, or other authorized person who can sign the debt settlement application; or compiled by FSA staff when a signature cannot be obtained.
(2) The debt may be settled when the borrower has no known assets or income from which collection can be made, has disappeared and cannot be located without undue expense, and there is no security remaining for the debt.
(3) In cases where the full amount of the unsecured debt cannot be collected in a reasonable time by legal action or through enforced collection proceedings, the Agency may consider a debt settlement offer submitted by a borrower without requiring a complete application. When evaluating these offers, the Agency will consider the likelihood of the debtor obtaining a larger income or additional assets, including inheritance prospects within 5 years, from which legal or enforced collection could be made.
(c) A borrower is not eligible for debt settlement if:
(1) The borrower is indebted on another active FLP loan that the borrower cannot or will not debt settle; or
(2) The debt has been referred to the OIG, OGC, or Justice because of suspected civil or criminal violation, unless investigation was declined or advice was provided that the debt can be canceled, compromised, or adjusted.
(a) A borrower requesting debt settlement must submit complete and accurate information from which the Agency can make a full determination of the borrower's financial circumstances and repayment ability. Except for the situations listed in §761.404(b), each liable party, must submit the following:
(1) One completed original debt settlement application on the applicable Agency form signed by all parties liable for the debt;
(2) A current financial statement;
(3) A cash flow projection for the next production or earnings period;
(4) Verification of employment or other earned income, including verification of a nondebtor spouse's income which will be included as available to pay family living expenses;
(5) Verification of assets including, but not limited to, cash, checking accounts, savings accounts, certificates of deposit, individual retirement accounts, retirement and pension funds, mutual funds, stocks, bonds, and accounts receivable;
(6) Verification of debts greater than $1,000;
(7) Copies of complete Federal income tax returns for the previous 3 years; and
(8) Any other items requested by the Agency to evaluate the debtor's financial condition.
(a) Compromise. The Agency may compromise a debt owed to the Agency if the requirements of this subpart are met and:
(1) The borrower pays a lump sum as a compromise for the remaining unsecured debt; and
(2) The amount is reasonable based on the Agency's determination of what the borrower can pay to settle the debt.
(b) Adjustment. The Agency may settle a debt owed to the Agency through an adjustment agreement if the requirements of this subpart are met and:
(1) The borrower agrees to pay the adjustment amount for a period of time not to exceed 5 years; and
(2) The amount is reasonable based on the Agency's determination of what the borrower can pay to settle the debt; and
(3) The borrower provides documentation that funds are, or will be, available to pay the adjustment offer through its term.
(c) Cancellation. The Agency may cancel a debt owed to the Agency if the requirements of this subpart are met and the application and supporting documents indicate that the borrower is unable to pay a compromise or adjustment offer.
(a) Failure to pay any compromise amount approved by FSA by the date agreed will result in cancellation of the compromise agreement.
(b) Failure to pay debt adjustment amounts approved by FSA by the dates agreed will result in cancellation of the adjustment agreement.
(c) A debtor who has entered into an agreement under this subpart may request that FSA extend a repayment date for 90 days. The debtor must provide information that supports the basis for the request at the time the request is made.
(d) If a debtor is delinquent under the terms of an adjustment agreement and FSA determines the debtor is likely to be financially unable to meet the terms of the agreement, the existing agreement may be cancelled and the debtor may be allowed to apply for a different type of settlement more consistent with the debtor's repayment ability.
(e) If an agreement is cancelled, any payments received will be retained as payments on the debt owed.
On an individual case basis, the Agency may consider granting an exception to any requirement of this part if:
(b) The Agency's financial interest would be adversely affected by acting in accordance with this part and granting an exception would resolve or eliminate the adverse effect upon its financial interest.