31 Cfr 901_8

§ 901.8

31 CFR Ch. IX (7–1–04 Edition)

the debt(s) within a reasonable time
after demand and if such action is in
the best interest of the United States.
Collection from other sources, including liquidation of security or collateral, is not a prerequisite to requiring
payment by a surety, insurer, or guarantor unless such action is expressly
required by statute or contract.
(b) When an agency learns that a
bankruptcy petition has been filed with
respect to a debtor, the agency should
seek legal advice from its agency counsel concerning the impact of the Bankruptcy Code, including, but not limited
to, 11 U.S.C. 362, to determine the applicability of the automatic stay and
the procedures for obtaining relief
from such stay prior to proceeding
under paragraph (a) of this section.
§ 901.8

Collection in installments.

(a) Whenever feasible, agencies shall
collect the total amount of a debt in
one lump sum. If a debtor is financially
unable to pay a debt in one lump sum,
agencies may accept payment in regular installments. Agencies should obtain financial statements from debtors
who represent that they are unable to
pay in one lump sum and independently verify such representations
whenever possible (see § 902.2(g) of this
chapter). Agencies that agree to accept
payments in regular installments
should obtain a legally enforceable
written agreement from the debtor
that specifies all of the terms of the arrangement and that contains a provision accelerating the debt in the event
of default.
(b) The size and frequency of installment payments should bear a reasonable relation to the size of the debt and
the debtor’s ability to pay. If possible,
the installment payments should be
sufficient in size and frequency to liquidate the debt in three years or less.
(c) Security for deferred payments
should be obtained in appropriate
cases. Agencies may accept installment payments notwithstanding the
refusal of the debtor to execute a written agreement or to give security, at
the agency’s option.

§ 901.9 Interest, penalties, and administrative costs.
(a) Except as provided in paragraphs
(g), (h), and (i) of this section, agencies
shall charge interest, penalties, and administrative costs on debts owed to the
United States pursuant to 31 U.S.C.
3717. An agency shall mail or hand-deliver a written notice to the debtor, at
the debtor’s most recent address available to the agency, explaining the
agency’s
requirements
concerning
these charges except where these requirements are included in a contractual or repayment agreement. These
charges shall continue to accrue until
the debt is paid in full or otherwise resolved through compromise, termination, or waiver of the charges.
(b) Agencies shall charge interest on
debts owed the United States as follows:
(1) Interest shall accrue from the
date of delinquency, or as otherwise
provided by law.
(2) Unless otherwise established in a
contract, repayment agreement, or by
statute, the rate of interest charged
shall be the rate established annually
by the Secretary in accordance with 31
U.S.C. 3717. Pursuant to 31 U.S.C. 3717,
an agency may charge a higher rate of
interest if it reasonably determines
that a higher rate is necessary to protect the rights of the United States.
The agency should document the reason(s) for its determination that the
higher rate is necessary.
(3) The rate of interest, as initially
charged, shall remain fixed for the duration of the indebtedness. When a
debtor defaults on a repayment agreement and seeks to enter into a new
agreement, the agency may require
payment of interest at a new rate that
reflects the current value of funds to
the Treasury at the time the new
agreement is executed. Interest shall
not be compounded, that is, interest
shall not be charged on interest, penalties, or administrative costs required
by this section. If, however, a debtor
defaults on a previous repayment
agreement, charges that accrued but
were not collected under the defaulted
agreement shall be added to the principal under the new repayment agreement.

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