STANDARDS FOR COLLECTION OF CLAIMS

AUTHORITY: §§ 1.910 to 1.921 issued under 72 Stat. 1114; 38 U.S.C. 210.

SOURCE: 1.910 to 1.921 appear at 32 F.R. 2613, Feb. 8, 1967, unless otherwise noted. § 1.910

Aggressive collection action.

The Veterans Administration will take aggressive action, on a timely basis with effective followup, to collect all claims for money or property arising from its activities.

will

§ 1.911 Demand for payment. The Veterans Administration make written demands for the payment of all debts which arise from its activities except in cases where immediate offset is made against current payments. The first demand will advise the debtor of the consequence of his failure to cooperate and of such rights to request waiver or further hearing as may exist in the particular case.

Prompt response will be made to all communications from debtors. Where no Veterans Administration right to offset exists and the debtor fails to make satisfactory reply, second and third demands will be made at 30-day intervals unless it is apparent that further demand would be futile or unless prompt suit or attachment is required in anticipation of the departure of the debtor or debtors from the jurisdiction or his or their removal or transfer of assets or the running of the statute of limitations.

§ 1.912

Collection by offset.

The Veterans Administration will initiate collection by offset on claims which are liquidated or certain in amount and When where the right to offset exists. previous demand has been made, offset action will be taken when the debtor either agrees to such action or fails to make satisfactory response to the first demand within 30 days. Collections by offset from persons receiving pay or compensation from the Veterans Administration will be effected over a period not greater than the period such pay or compensation may be expected to continue. See 5 U.S.C. 5514 and 38 U.S.C. 3101. Collection by offset against a judgment obtained by the debtor against the United States will be accomplished in accordance with the Act of March 3, 1875, 18 Stat. 481, as amended, 31 U.S.C. 227. The Veterans Administration will make full use of the cooperative services

When a debtor of the Veterans Administration is employed by another agency of the Federal Government or is a member of the Military establishment or the Coast Guard and collection by offset cannot be accomplished in accordance with 5 U.S.C. 5514, the Veterans Administration will contact the employing agency in an effort to arrange with the debtor for payment of the indebtedness by allotment or otherwise in accordance with section 206 of Executive Order 11222 of May 8, 1965 (30 F.R. 6469; 3 CFR 1965 Supp., pp. 130, 131).

Demands on debtors who are lenders, contractors, brokers, or other participants in Veterans Administration programs will include notification that failure to pay their debts within a reasonable time may be cause for suspension or disqualification to the extent authorized by law. Nothing in this section is intended to be in derogation of the provisions of 38 U.S.C. 1804 (b) and 1804(d) as implemented by §§ 36.4331 and 36.4361 of this chapter. The failure of any surety to honor its obligations in accordance with 6 U.S.C. 11 will be reported to the Treasury Department at once. Prompt and appropriate Veterans Administration action will be taken upon receipt of Treasury Department notification that a surety's certificate of authority to do business with the Federal Government has been revoked or forfeited. § 1.916 Liquidation of collateral.

The Veterans Administration will exercise its rights to liquidate security or collateral and apply the proceeds to debts due it through use of a power of sale in the security instrument or a nonjudicial foreclosure if the debtor fails to pay his debt, within a reasonable time after demand, unless the cost of disposing of the collateral will be dispropor

tionate to its value or the particular circumstances require judicial foreclosure. Collection from other sources, including liquidation of security or collateral, is not a prerequisite to requiring payment by a surety or insurance company unless such action is expressly required by statute or contract.

§ 1.917 Collection in installments.

The Veterans Administration will collect claims, with interest, where applicable, in one lump sum whenever possible. However, if the debtor is financially unable to pay the indebtedness in one lump sum, payment may be accepted in regular installments. The size and frequency of installment payments will be governed by the size of the debt and the debtor's ability to pay, but should not extend more than 3 years or be less than $10 per month except in only the most unusual circumstances. The Veterans Administration will attempt to obtain an executed confess-judgment note comparable to Department of Justice Form USA 70a whenever the total amount of unsecured deferred installments exceeds $750. Other security for deferred payments may be accepted in appropriate cases. However, installment payments may be accepted notwithstanding the debtor's refusal to execute a confessjudgment note or to give other security. $1.918 Exploration of compromise.

The Veterans Administration will attempt to affect compromises in claims of $20,000 or less exclusive of interest in accordance with the standards set forth in §§ 1.930 through 1.937 in all cases in which it is ascertained that the debtor is financially unable to pay the full amount or in which the litigative risks or the costs of litigation dictate such action.

The Veterans Administration may forego prejudgment interest not mandated by statute, contract, or regulation as an inducement to voluntary payment. In such cases, demand letters will inform debtors that prejudgment interest will be collected if suit becomes necessary. When a debt is collected in installments and interest is included, the installment payments will first be applied to the payment of accrued interest and then to principle in accordance with the so called "U.S. Rule", except that on debts arising as a result of defaults on loans guaranteed, insured, or made pursuant to Title 38,

§ 1.921

Additional collection action.

Nothing in §§ 1.900 through 1.954 is intended to preclude the utilization of any other remedy available to the Veterans Administration.

STANDARDS FOR COMPROMISE OF CLAIMS AUTHORITY: §§ 1.930 to 1.937 issued under 72 Stat. 1114; 38 U.S.C. 210.

SOURCE: $ 1.930 to 1.937 appear at 32 F.R. 2614, Feb. 8, 1967, unless otherwise noted. § 1.930 Scope and application.

The standards contained in §§ 1.930 through 1.937 apply to the compromise by the Administrator of Veterans Affairs or his designee of claims of the Government which arise from the activities of the Veterans Administration, do not exceed $20,000 exclusive of interest, have not been referred to the General Accounting Office or the Department of Justice, and do not arise out of an exception made by the General Accounting Office in the account of an accountable officer. The $20,000 limitation does not apply to loan guarantee indebtedness under 38 U.S.C., Chapter 37. § 1.931 Inability to pay.

The Veterans Administration will attempt to compromise claims for less than the full amount when the debtor is clearly unable to pay the full amount within a reasonable time or the debtor refuses to pay in full and the Government appears unable to enforce full collection within a reasonable time. The compromise authority contained in §§ 1.930 through 1.937 will not be utilized to grant equitable relief denied under waiver authority. All compromise amounts will bear a

reasonable relation to the amount realizable under enforced collection procedures considering the circumstances. Compromises payable in installments are discouraged. However, if payment of a compromise by installments is necessary, an agreement for the reinstatement of the prior indebtedness less sums paid thereon and acceleration of the balance due upon default in the payment of any installment should be obtained, together with security in the manner set forth in § 1.197, in every case in which this is possible. If the agency's filles do not contain reasonably up-to-date credit information as a basis for assessing a compromise proposal such information may be obtained from the individual debtor by obtaining a statement executed under penalty of perjury showing the debtor's assets and liabilities, income and expense. Similar data may be obtained from corporate debtors by resort to balance sheets and such additional data as seems required.

§ 1.932 Litigative possibilities.

The Veterans Administration will attempt to compromise claims when there is a real doubt as to the Government's ability to prove its case in court for the full amount claimed either because of the legal issues involved or bona fide dispute as to the facts. The amount accepted in compromise will fairly reflect the probability of prevailing on the legal question involved, the probabilities with respect to full or partial recovery of a judgment having due regard to the availability of witnesses and other evidentiary support for the Government claim, and related pragmatic considerations. Proportionate weight will be given the court costs which may be assessed against the Government if it is unsuccessful in litigation, having regard for the litigative risks involved. Cf. 28 U.S.C. 2412, as amended by Public Law 89-507, 80 Stat. 308.

reasons.

The Veterans

Administration may compromise specific claims for any combination of the reasons authorized in §§ 1.931 through 1.934.

§ 1.936 Further review of compromise offers.

The Veterans Administration may refer to the General Accounting Office or Department of Justice firm written offers from debtors when there is doubt whether the offers should be accepted. § 1.937 Restrictions.

The Veterans Administration will not accept either a percentage of a debtor's profits or stock in a debtor corporation in compromise of a claim. Tax-loss effects will be considered in negotiating compromises with business concerns. STANDARDS FOR SUSPENDING OR TERMINATING COLLECTION ACTION AUTHORITY: §§ 1.940 to 1.943 issued under 72 Stat. 1114; 38 U.S.C. 210.

SOURCE: 1.940 to 1.943 appear at 32 F.R. 2615, Feb. 8, 1967, unless otherwise noted. § 1.940 Scope and application.

The standards contained in §§ 1.940 through 1.944 apply to the suspension or termination of Veterans Administration collection action on claims which do not exceed $20,000 exclusive of interest and which have not been referred to the General Accounting Office or to the Department of Justice for litigation. § 1.941 Suspension of collection activity.

Suspension of collection activity constitutes merely the temporary cessation of collection effort. The Veterans Administration will suspend collection activity on all claims where the debtor cannot be located after diligent effort and there is reason to believe that future collection action may be sufficiently productive to justify periodic review and action on the claim having consideration for its size and the amount which may be realized thereon. Col

lection action may be suspended temporarily on a claim when the debtor owns no substantial equity in realty and is unable to make payments on the Government's claim or effect a compromise thereof at the time but his future prospects justify retention of the claim for periodic review and action and (a) the applicable statute of limitations has been tolled or started running anew or (b) future collection can be effected by offset notwithstanding the statute of limitations. Suspension of collection activity as to a particular debtor will not defer the early liquidation of any security for the debt. Every effort will be made to locate missing debtors sufficiently in advance of the bar of any applicable statute of limitations to permit the timely filing of suit if such action is warranted. If the missing debtor has signed a confess-judgment note and is in default, referral of the note for entry of judgment will not be delayed because of his missing status.

§ 1.942 Termination of collection activity.

cases

Termination of collection activity involves a final determination. Collection activity may be terminated on previously suspended. The Veterans Administration may terminate collection activity and consider closing the agency file on a claim which meets any one of the following standards:

(a) Inability to collect any substantial amount. It is clear that the Government cannot enforce collection of any significant sum from the debtor and future prospects for collection are remote.

(b) Inability to locate debtor. The debtor cannot be located, no security remains to be liquidated, the applicable statute of limitations has run, and the prospects of collecting by offset are too remote.

(c) Decease of debtor. The debtor is determined to be deceased and the Government has no prospect of collecting from his estate.

(d) Cost will exceed recovery. The cost of further collection effort is likely to exceed the amount recoverable.

(e) Claim legally without merit. Collection action should be terminated on a claim whenever it is determined that the claim is legally without merit.

(f) Claim cannot be substantiated by evidence. The Veterans Administration will terminate collection action on once

REFERRALS TO GAO OR JUSTICE DEPARTMENT FOR LITIGATION

AUTHORITY: §§ 1.950 to 1.954 issued under 72 Stat. 1114; 38 U.S.C. 210.

SOURCE: 1.950 to 1.954 appear at 32 F.R. 2615, Feb. 8, 1967, unless otherwise noted. § 1.950 Prompt referral.

The Veterans Administration will refer promptly to the General Accounting Office or to the Department of Justice as appropriate claims which are not compromised or on which collection action is not suspended or terminated in accordance with §§ 1.900 through 1.954. Due consideration will be given the timing of referrals in relation to any limitations on the timing of suits against debtors. § 1.951 Current address of debtor.

All referrals will include the current address of the debtor or the name and address of the agent for a corporation upon whom service may be made when such addresses are known to the Veterans Administration. Referrals in which the current address of any party is unknown will include a listing of all prior known addresses and a statement of the steps taken to locate each such party.

§ 1.952 Credit data.

(a) Every claim referred by the Veterans Administration to other authority will include reasonably current information concerning the debtor's ability to pay.

(b) Such credit data may take the form in order of preferences of:

(1) A commercial credit report.

(2) A Veterans Administration investigative report showing the debtor's assets and liabilities, income and expenses.

Sec. 2.52

Delegation of authority to certain employees to exercise certain powers and functions of the Administrator with respect to the guaranty or insurance of loans. The authority hereby delegated to these employees may, with the approval of the Chief Benefits Director, be redelegated.

2.53 Delegation of authority to certain employees to exercise certain powers and functions of the Administrator with respect to assisting eligible veterans to acquire specially adapted housing.

2.54 Delegation of authority to certain employees to exercise the power of the Administrator to waive procedural (nonsubstantive) requirements of

the direct loan regulations.

2.55 Delegation of authority to certain employees to exercise certain powers and functions of the Administrator with respect to the making of direct loans. The authority hereby delegated to these employees may, with the approval of the Chief Benefits Director, be redelegated.

2.56 Directors of Veterans Administration hospitals authorized to appoint boards of medical officers, consisting of at least three qualified physicians, one of whom must be qualified in treatment of mental disorders, to determine whether members of uniformed services who are being furnished medical care in our hospitals are mentally capable of managing their own affairs.

2.57

2.62

Chief Attorneys authorized to release funds from Personal Funds of Patients for the needs of veterans and their dependents including amounts fixed by statute or valid administrative regulations as the cost of current maintenance of veterans in public institutions other than Veterans Administration institutions.

The Contract Appeals Board authorized by Administrator to ascertain the facts and circumstances and to render and publish final decisions on appeals entered by contractors from decisions of Veterans Administration contracting officers in accordance with contract terms and §§ 1.770 through 1.775.

2.63 The Contract Appeals Board and its individual members authorized by Administrator to take such actions as may be necessary to hear and decide appeals including the administering of oaths and affirmations, the taking of testimony and affidavits, the conduct of hearings, the dismissal of proceedings and ordering the production of documents and other evidence.