The Financial Litigation Unit (FLU) is staffed with an Assistant U.S. Attorney, a Paralegal Specialist and a Legal Assistant. Its mission is the collection of criminal and civil debts owing to the United States.
Criminal debts include fines, penalties and restitution ordered as part of sentencing judgments in federal criminal cases. These debts frequently involve high-dollar restitution judgments ordered to be paid to the victims of a convicted defendant's criminal activity. These victims may be private citizens or governmental agencies.
Civil debts owed to the United States include both pre-judgment and post-judgment liabilities. These debts arise from a variety of relationships between government agencies and departments, and the public. Frequently, civil debts arise from contractual relationships between federal agencies and non-federal entities and individuals, under which money is loaned by the federal agency and the borrower defaults in payment. Examples include student loans by the Department of Education, start-up loans to private entrepreneurs by the Small Business Administration, and farm and residential loans by the Department of Agriculture. Civil debts may also arise from overpayments by federal agencies under the various programs they administer, such as Medicare and Social Security, to individuals or entities not entitled to the funds. Other civil debts result from the imposition of civil penalties imposed by federal agencies, such as the Federal Aviation Administration and the Social Security Administration.
The FLU Unit operates under the collection laws of the State in which the debtor resides (generally New Hampshire) and federal law, primarily the Federal Debt Collection Procedures Act (28 U.S.C. §§ 3001, et seq.), and numerous federal criminal fines statutes. FLU staff expend countless hours searching for debtors and their assets. Generally, this office does not receive a civil debt for collection until all other possible means of collection have been exhausted. Once debtors and assets are found, unwilling debtors face federal litigation. The authority to place liens on the property of both criminal and civil debtors is a strong and useful tool used by the FLU staff. Other remedies include the garnishment of wages, seizure of property, and fraudulent transaction suits. In addition, the FLU conducts judgment debtor examinations and may offset funds owed to a debtor by the federal government, such as a debtor's federal income tax refund. Criminal debtors who are incarcerated may pay their debts by participating in the Bureau of Prisons' Inmate Financial Responsibility Program.
The FLU works closely with other federal agencies involved in the collection of federal debts. These include the United States Probation Office, the Clerk of the United States District Court, the Internal Revenue Service, the Department of Education and the Department of Agriculture, to name a few.
The United States becomes involved in bankruptcy cases when an individual, corporation, or partnership that owes money to the United States, files for protection under the bankruptcy laws of the United States. The FLU acts as counsel for the federal creditors of a debtor who has filed for bankruptcy protection. The FLU seeks to protect the United States' interest in what remains of the debtor's assets. The FLU is called on to defend against objections filed by the debtor, other creditors, or trustees to Proofs of Claim filed by federal governmental agencies. The FLU also represents its federal agency clients by ensuring that debtors' Plans of Reorganization comply with the laws regarding federal debts.
The FLU also defends against various attempts in bankruptcy proceedings to discharge federal debts such as income taxes, loans to physicians and other health care professionals from the Department of Health and Human Services (HHS), small business loans from the Small Business Administration (SBA) and the Department of Agriculture (USDA), and student loans from the Department of Education. At times, the FLU will ask to have the automatic stay of a bankruptcy case lifted to enforce the public health, safety and welfare regulations of the United States or to have an appropriate case converted to a Chapter 7 (liquidation) bankruptcy.