Federal financial assistance unless exempted under paragraph (d) of this section or waived under paragraph (e) of E this section. (b) Federal financial assistance or financial assistance means any Federal loan (other than a disaster loan), loan insurance, or loan guarantee. (c) For the purposes of this section - only, a debt is in a delinquent status if the debt has not been paid within 90 days of the payment due date or by the end of any grace period provided by statute, regulation, contract, or agreement. The payment due date is the date specified in the initial written demand for payment. Further guidance concerning the delinquent status of a debt may be found at 31 CFR 285.13(d). (d) Upon the written request and recommendation of the Secretary of Veterans Affairs, the Secretary of the Treasury may grant exemptions from the provisions of this section. The standards for exemptions granted for classes of debts are set forth in 31 CFR 285.13(f). (e)(1) VA's Chief Financial Officer or Deputy Chief Financial Officer may waive the provisions of paragraph (a) of this section only on a person-by-person basis. (2) The Chief Financial Officer or Deputy Chief Financial Officer should balance the following factors when deciding whether to grant a waiver: (i) Whether the denial of the financial assistance to the person would tend to interfere substantially with or defeat the purposes of the financial assistance program or otherwise would not be in the best interests of the Federal government; and (ii) Whether the granting of the financial assistance to the person is contrary to the government's goal of reducing losses by requiring proper screening of potential borrowers. (3) When balancing the factors described in paragraph (e)(2)(i) and (e)(2)(ii) of this section, the Chief Financial Officer or Deputy Chief Financial Officer should consider: (i) The age, amount, and cause(s) of the delinquency and the likelihood that the person will resolve the delinquent debt; and (ii) The amount of the total debt, delinquent or otherwise, owed by the per son and the person's credit history with respect to repayment of debt. (4) A centralized record shall be retained of the number and type of waivers granted under this section. (f) In non-bankruptcy cases, in seeking the collection of statutory penalties, forfeitures, or other similar types of claims, VA may suspend or revoke any license, permit, or other privilege granted a debtor when the debtor inexcusably or willfully fails to pay such a debt. The debtor should be advised in VA's written demand for payment of VA's ability to suspend or revoke licenses, permits, or privileges. VA may suspend or disqualify any lender, contractor, or broker who is engaged in making, guaranteeing, insuring, acquiring, or participating in loans from doing further business with VA or engaging in programs sponsored by VA if such lender, contractor, or broker fails to pay its debts to the Government within a reasonable time, or if such lender, contractor, or broker has been suspended, debarred, or disqualified from participation in a program or activity by another Federal agency. The failure of any surety to honor its obligations in accordance with 31 U.S.C. 9305 should be reported to Treasury. (g) In bankruptcy cases, before advising the debtor of the intention to suspend or revoke licenses, permits, or privileges, VA should seek legal advice from VA's General Counsel or Regional Counsel concerning the impact of the Bankruptcy Code, particularly 11 U.S.C. 362 and 525, which may restrict such action. (Authority: 31 U.S.C. 3720B; 38 U.S.C. 501). [69 FR 62197, Oct. 25, 2004] §1.929 Reduction of debt through performance of work-study services. (a) Scope. (1) Subject to the provisions of this section VA may allow an individual to reduce an indebtedness to the United States through offset of benefits to which the individual becomes entitled by performance of work-study services under 38 U.S.C. 3485 and 3537 when the debt arose by virtue of the individual's participation in a benefits program provided under any of the following: (i) 38 U.S.C. chapter 30; (vi) 38 U.S.C. chapter 36 (other than an education loan provided under subpart F, part 21 of this title); or (vii) 10 U.S.C. chapter 1606 (other than an indebtedness arising from a refund penalty imposed under 10 U.S.C. 16135). (2) This section shall not apply in any case in which the individual has a pending request for waiver of the debt under §§ 1.950 through 1.970. (Authority: 38 U.S.C. 3485(e)(1); Pub. L. 102 16) (b) Selection criteria. (1) If there are more candidates for a work-study allowance than there are work-study positions available in the area in which the services are to be performed, VA will give priority to the candidates who are pursuing a program of education or rehabilitation. (2) Only after all candidates in the area described in paragraph (b)(1) of this section either have been given work-study contracts or have withdrawn their request for contracts will VA offer contracts to those who are not pursuing a program of education or rehabilitation and who wish to reduce their indebtedness through performance of work-study services. (3) VA shall not offer a contract to an individual who is receiving compensation from another source for the workstudy services the individual wishes to perform. (4) VA shall not offer a contract to an individual if VA determines that the debt can be collected through other means such as collection in a lump sum, collection in installments as provided in §1.917 or compromise as provided in §1.918. (Authority: 38 U.S.C. 3485(e); Pub. L. 102–16) (c) Utilization. The work-study services to be performed under a debt-liquidation contract will be limited as follows: (1) If the individual is concurrently receiving educational assistance in a program administered by VA. workstudy services are limited to those al (Authority: 38 U.S.C. 3485(e); Pub. L. 102-16: (d) Contract to perform services. (1) The work-study services performed to re duce indebtedness shall be performe pursuant to a contract between the individual and VA. (2) The individual shall perform the work-study services required by the contract at the place or places designated by VA. (3) The number of hours of services to be performed under the contract must be sufficient to enable the individual to become entitled to a sum large enough to liquidate the debt by offset. (4) The number of weeks in the cotract will not exceed the lesser of (i) The number of weeks of service the individual needs to perform to liq uidate his or her debt; or (ii) 52. (5) In determining the number of hours per week and the number of weeks under paragraphs (d)(3) and (d)4) of this section necessary to liquidat the debt, VA will use the amount of the account receivable, including all ac crued interest, administrative costs and marshall fees outstanding on the date the contract is offered to the ind. vidual and all accrued interest, administrative costs and marshall fees VA es timates will have become outstanding on the debt on the date the debt is be liquidated. (6) The contract will automatically terminate after the total amount of the individual's indebtedness described in paragraph (d)(5) of this section has been recouped, waived, or otherwis liquidated. An individual performing work-study services under a contrac to liquidate a debt is released from the contract if the debt is liquidated by other means. (7) The contract to perform workstudy services for the purpose of liquidating indebtedness will be terminated if: (i) The individual is liquidating his or her debt under this section while receiving either an educational assistance allowance for further pursuit of a program of education or a subsistence allowance for further pursuit of a program of rehabilitation; (ii) The individual terminates or reduces the rate of pursuit of his or her program of education or rehabilitation; and (iii) The termination or reduction causes an account receivable as a debt owed by the individual. (8) VA may terminate the contract at any time the individual fails to perform the services required by the contract in a satisfactory manner. (Authority: 38 U.S.C. 3485(e), 7104(a); Pub. L. 102-16) (e) Reduction of indebtedness. (1) In return for the individual's agreement to perform hours of services totaling not more than 40 times the number of weeks in the contract, VA will reduce the eligible person's outstanding indebtedness by an amount equal to the higher of (i) The hourly minimum wage in effect under section 6(a) of the Fair Labor Standards Act of 1938 times the number of hours the individual works; or (ii) The hourly minimum wage under comparable law of the State in which the services are performed times the number of hours the individual works. (2) VA will reduce the individual's debt by the amount of the money earned for the performance of workstudy services after the completion of each 50 hours of services (or in the case of any remaining hours required by the contract, the amount for those hours). may voluntarily permit VA to collect part of the debt through offset against other benefits payable while the individual is performing work-study services. If the contract is terminated before its scheduled completion date, and the debt has not been liquidated, collection through offset against other benefits payable will resume on the date the contract terminates. (Authority: 38 U.S.C. 3485(e); Pub. L. 102-16) (g) Payment for additional hours. (1) If an individual, without fault on his or her part, performs work-study services for which payment may not be authorized, including services performed after termination of the contract, VA will pay the individual at the applicable hourly minimum wage for such services as the Director of the VA field station of jurisdiction determines were satisfactorily performed. (2) The Director of the VA field station of jurisdiction shall determine whether the individual was without fault. In making this decision he or she shall consider all evidence of record and any additional evidence which the individual wishes to submit. (Authority: 38 U.S.C. 3485(e); Pub. L. 102-16) [62 FR 15401, Apr. 1, 1997] STANDARDS FOR COMPROMISE OF CLAIMS AUTHORITY: Sections 1.900 through 1.953 are issued under the authority of 31 U.S.C. 3711 through 3720E; 38 U.S.C. 501, and as noted in specific sections. SOURCE: 32 FR 2614, Feb. 8, 1967, unless otherwise noted. §1.930 Scope and application. (a) The standards set forth in §§1.930 through 1.936 of this part apply to the compromise of debts pursuant to 31 U.S.C. 3711. VA may exercise such compromise authority when the amount of the debt due, exclusive of interest, penalties, and administrative costs, does not exceed $100,000 or any higher amount authorized by the Attorney General. (b) Unless otherwise provided by law, when the principal balance of a debt, exclusive of interest, penalties, and administrative costs, exceeds $100,000 or any higher amount authorized by the Attorney General, the authority to accept the compromise rests with the Department of Justice (DOJ). If VA receives an offer to compromise any debt in excess of $100,000, VA should evaluate the compromise offer using the same factors as set forth in §1.931 of this part. If VA believes the offer has merit, it shall refer the debt to the Civil Division or other appropriate division in DOJ using a Claims Collection Litigation Report (CCLR). The referral shall include appropriate financial information and a recommendation for the acceptance of the compromise offer. DOJ approval is not required if VA decides to reject a compromise offer. (c) The $100,000 limit in paragraph (b) of this section does not apply to debts that arise out of participation in a VA loan program under Chapter 37 of Title 38 of the U.S. Code. VA has unlimited authority to compromise debts arising out of participation in a Chapter 37 loan program, regardless of the amount of the debt. (Authority: 31 U.S.C. 3711; 38 U.S.C 501, 3720). [69 FR 62198, Oct. 25, 2004] §1.931 Bases for compromise. (a) VA may compromise a debt if it cannot collect the full amount because: (1) The debtor is unable to pay the full amount in a reasonable time, as verified through credit reports or other financial information; (2) VA is unable to collect the debt in full within a reasonable time by enforced collection proceedings; (3) The cost of collecting the debt does not justify the enforced collection of the full amount; or (4) There is significant doubt concerning VA's ability to prove its case in court. (b) In determining the debtor's inability to pay, VA will consider relevant factors such as the following: (1) Age and health of the debtor; (4) The possibility that assets have been concealed or improperly transferred by the debtor; and (5) The availability of assets or income that may be realized by enforced collection proceedings. (c) VA will verify the debtor's claim of inability to pay by using a credit re port and other financial information as provided in paragraph (g) of this sec tion. VA should consider the applicable exemptions available to the debtor under State and Federal law in deter mining the ability to enforce collec tion. VA also may consider uncertaint as to the price that collateral or othe property will bring at a forced sale i determining the ability to enforce col lection. A compromise effected unde this section should be for an amourt that bears a reasonable relation to the amount that can be recovered by eforced collection procedures, with re gard to the exemptions available to the debtor and the time that collectic: will take. (d) If there is significant doubt cor cerning VA's ability to prove its case in court for the full amount claimed either because of the legal issues involved or because of a bona fide dispute as to the facts, then the amount accepted in compromise of such cases should fairly reflect the probabilities of successful prosecution to judgmer: with due regard given to the avaability of witnesses and other ev dentiary support for VA's claim. In determining the risks involved in litigation, VA will consider the probable amount of court costs and attorney fees pursuant to the Equal Access to Justice Act, 28 U.S.C. 2412, that may be imposed against the Government if it is unsuccessful in litigation. (e) VA may compromise a debt if the cost of collecting the debt does not jus tify the enforced collection of the ful amount. The amount accepted in com promise in such cases may reflect an appropriate discount for the adminis trative and litigative costs of collec tion, with consideration given to the time it will take to effect collection Collection costs may be a substantial factor in the settlement of small debts. In determining whether the cost of collecting justifies enforced collection of the full amount, VA will conside whether continued collection of the debt, regardless of cost, is necessary to further an enforcement principle. (f) VA generally will not accept compromises payable in installments. If however, payment of a compromise in installments is necessary, VA will obtain a legally enforceable written agreement providing that, in the event of default, the full original principal balance of the debt prior to compromise, less sums paid thereon, is reinstated. Whenever possible, VA will also obtain security for repayment. (g) To assess the merits of a compromise offer based in whole or in part on the debtor's inability to pay the full amount of a debt within a reasonable time, VA will obtain a current financial statement from the debtor showing the debtor's assets, liabilities, income, and expenses. Agencies also may obtain credit reports or other financial information to assess compromise offers. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501, 3720). [69 FR 62198, Oct. 25, 2004] § 1.932 Enforcement policy. VA may compromise statutory penalties, forfeitures, or claims established as an aid to enforcement and to compel compliance, if VA's enforcement policy in terms of deterrence and securing compliance, present and future, will be adequately served by VA's acceptance of the sum to be agreed upon. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501, 3720). [69 FR 62198, Oct. 25, 2004] §1.933 Joint and several liability. (a) When two or more debtors are jointly and severally liable, VA will pursue collection activity against all debtors, as appropriate. VA will not attempt to allocate the burden of payment between the debtors but should proceed to liquidate the indebtedness as quickly as possible. (b) VA will ensure that a compromise agreement with one debtor does not release VA's claim against the remaining debtors. The amount of a compromise with one debtor shall not be considered a precedent or binding in determining the amount that will be required from other debtors jointly and severally liable on the claim. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501, 3720). [69 FR 62198, Oct. 25, 2004] § 1.934 Further review of compromise offers. If VA is uncertain whether to accept a firm, written, substantive compromise offer on a debt that is within its delegated compromise authority, it may refer the offer to VA General Counsel or Regional Counsel or to the Civil Division or other appropriate division in the Department of Justice (DOJ), using a Claims Collection Litigation Report (CCLR) accompanied by supporting data and particulars concerning the debt. DOJ may act upon such an offer or return it to the agency with instructions or advice. §1.936 Mutual releases of the debtor and VA. In all appropriate instances, a compromise that is accepted by VA shall be implemented by means of a mutual release, in which the debtor is released from further non-tax liability on the compromised debt in consideration of payment in full of the compromise amount, and VA and its officials, past and present, are released and discharged from any and all claims and causes of action that the debtor may have arising from the same transaction. In the event a mutual release is not executed when a debt is compromised, unless prohibited by law, the debtor is still deemed to have waived any and all claims and causes of action against VA and its officials related to the transaction giving rise to the compromised debt. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501, 3720). [69 FR 62198, Oct. 25, 2004] |