3-10.000 - Civil Financial Litigation Activity
| 3-10.120 | Nationwide Central Intake Facility |
| 3-10.130 | Claims Collection Litigation Report |
| 3-10.131 | Returning Deficient Referrals |
| 3-10.140 | Filing Complaint |
| 3-10.150 | Prejudgment Agreements to Pay |
| 3-10.160 | Civil Compromise Policy |
| 3-10.200 | Civil Postjudgment Financial Litigation Activity—Perfecting the Judgment |
| 3-10.220 | Bill of Cost |
| 3-10.230 | Notice of Entry of Judgment to Client Agency |
| 3-10.240 | Postjudgment Demand |
| 3-10.300 | Installment Payment Plans |
| 3-10.400 | Receipt of Payments by United States Attorneys' Office |
| 3-10.410 | Return of Certain Bankruptcy Cases to Agencies for Collection |
| 3-10.500 | Enforced Collections |
| 3-10.510 | Discovery to determine ability to pay |
| 3-10.520 | Federal Debt Collection Procedures Act Tools |
| 3-10.530 | Offset |
| 3-10.540 | Depriving Debtors of Their Residence |
| 3-10.600 | Transfers |
| 3-10.620 | Assists |
| 3-10.700 | Terminating Civil Postjudgment Collection Action-Suspension of Collection Action |
| 3-10.710 | Returning Case to Agency |
3-10.120 - Nationwide Central Intake Facility
All federal agencies are required to refer claims when the principalamount is $1,000,000 or less for litigation or debt enforcement to the Department of Justice through the Nationwide Central Intake Facility (NCIF). The NCIF acknowledges receipt of the claim, provides a limited review of the Claims Collection Litigation Report (CCLR) for compliance with the Federal Claims Collection Standards, sends a demand letter to the debtor, opens a record in the Department-wide debt collection tracking system, and forwards the information to the appropriate United States Attorney's office for litigation. Federal agencies are not required to send the following types of cases to theNCIF: anti-trust cases; environment and natural resources cases; tax cases; fraud cases; interagency claims; renewal of judgment lien only cases; and if the agency is seeking Department of Justice concurrence on an agency's proposal to suspend or terminate action to collect a claim.
In cases where time is of the essence in securing the government's position, the agency may send a referral directly to the United States Attorney's office with a copy of the CCLR to the NCIF. If the Financial Litigation/Asset Recovery Unit receives a referral package directly from an agency, or they are requested to enforce a civil judgment from another division within the United States Attorney's office that has not been previously docketed by the NCIF, Financial Litigation/Asset recovery Unit personnel shall open a record in the Department-wide debt collection tracking system.
3-10.130 - Claims Collection Litigation Report
The Federal Claims Collection Standards (31 C.F.R. Parts 900-904) prescribe regulations which agencies must follow to collect, compromise and suspend or terminate collection action on their claims. Agencies are required to provide certain information to the Department of Justice when referring claims for litigation and enforced collection. See 31 C.F.R. § 904.1 et seq. This information is conveyed by completion and submission of the Claims Collection Litigation Report (CCLR).
United States Attorneys' offices are responsible for ensuring that CCLRs comply with the requirements set forth in Federal Claims Collection Standards. These requirements should be addressed with agency representatives when claims are referred without the CCLR, or when the CCLRs provided are inadequate. Some information requested on the CCLR may be inapplicable to a particular agency's claim or impossible for the agency to obtain. The agency's inability to obtain all information required on the CCLR should not be viewed as a bar to the referral of a claim for litigation. However, information requested on the CCLR should be provided to the extent feasible and any omissions by the agency should be noted throughout the CCLR.
3-10.131 - Returning Deficient Referrals
If the CCLR or accompanying claim referral package is deficient and the deficiency cannot be expeditiously resolved with a minimum of effort, a deficiency or declination letter shall be immediately prepared and used to return the claim to the agency. This letter will inform the client agency of the specific reason(s) why the claim is considered deficient and that the United States Attorney presently declines to litigate and enforce collection of the claim.
Suit shall not be filed on any claim which is referred after the applicable statute of limitations period has expired. Such claims shall be immediately declined and returned to the agency. Agencies are required to refer claims to the Department of Justice as early as possible, consistent with aggressive agency collection action and should be well within the period for bringing a timely suit against the debtor. 31 C.F.R. § 904.1(a).
[updated September 2014] [cited in USAM 3-10.140]
3-10.140 - Filing Complaint
Routine fully-documented referrals for debt collection action should be filed within 30 days of receipt. More complex referrals which may require additional preparation time should be filed within 45 days. Incomplete referrals should be immediately declined. See USAM 3-10.131. Approval to file a complaint must be obtained from an Assistant United States Attorney who supervises other Assistant United States Attorneys who handle civil litigation. 28 C.F.R. Ch1, Pt 0, Subpart Y, App. Directive 14-95. In cases where federal law authorizes the United States to enforce a state court judgment (i.e., Public Health Service cases), the United States Attorney's office may register the judgment with the Clerk of the Court and enforce it accordingly.
3-10.150 - Prejudgment Agreements to Pay
If, after the government files the complaint, the debtor contacts the United States Attorneys' office, acknowledges the debt, and requests to enter into an installment payment plan, then the debtor shall be required to complete and sign a Form OBD-500, Financial Statement, or similar statement of financial disclosure. If the financial disclosure information reveals the debtor's ability to pay the debt in full, then the United States Attorney's office should require the debt to be paid in full within 90 days. It is strongly recommended that the debtor execute a consent judgment providing for entry of judgment by the court if full payment is not received within 90 days. A claim shall remain in prejudgment status only in those instances where the debtor agrees to pay the debt in full within 90 days. In the absence of a consent judgment, if full payment is not received within the 90 day period, the claim shall be pursued, judgment shall be obtained and enforced collection efforts initiated.
If an installment payment plan is justified based upon a review of the Financial Statement and other credit and/or financial asset information, the debtor shall be required to execute a consent judgment and that judgment shall be immediately entered with the court. The consent judgment shall be for an amount equal to the principal amount of the debt plus all prejudgment interest, administrative costs and penalties payable to the date of judgment, and court costs. The client agency shall be promptly notified of the entry of the judgment.
Once a determination has been made by the United States Attorney to pursue a claim, the government's interests should be promptly secured. Given that the debtor has been provided ample opportunity to arrange for payment of the debt prior to referral, it is counterproductive for the United States Attorney to provide further opportunity for payment without first securing the government's interests. Accordingly, the use of promissory notes containing an agreement for judgment are not acceptable.
The United States Attorney shall personally approve and set forth in writing for the Financial Litigation/Asset Recovery Unit any exceptions to this policy which are required for the handling of unusual types of situations or claims. Any approved exceptions shall be incorporated into the district's Financial Litigation Plan.
3-10.160 - Civil Compromise Policy
A compromise is an agreement to accept less than the total amount owing in principal interest, and administrative costs in civil cases. Compromises are accepted only when it is not in the best interest of the government to pursue the full amount of the debt. Pursuant to Title 31, Code of Federal Regulations (C.F.R.), Section 902.2, the factors to consider include: (1) the debtor's inability to pay the full amount within a reasonable time; (2) the government's inability 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 the Government's ability to prove its case in court.
Pursuant to 28 C.F.R., Part O, Subpart Y, Civil Division Directive 14-95, compromises must be approved by an Assistant United States Attorney who supervises other Assistant United States Attorneys who handle civil litigation.
A claim or judgment should only be compromised with agency approval. Whenever a claim is compromised, the full compromised debt should be collected in a lump sum within 90 days. If the compromise is not paid in full within 90 days, the government's claim must be secured by the entry of a judgment.
Following payment of a compromised amount, the Financial Litigation/Asset Recovery Unit shall promptly send the client agency a notice of compromise and a closing letter. The letter will document for the agency the reason(s) why the claim was compromised and inform it of the total amount recovered.
3-10.200 - Civil Postjudgment Financial Litigation Activity—Perfecting the Judgment
Immediately following expiration of the 10-day automatic stay after entry of the judgment (whether by default, stipulation, court determination, or by the referral of a judgment from another district), see Fed. R. Civ. P. 62(a), immediate action shall be taken to perfect the judgment as a lien in accordance with the Federal Debt Collection Procedures Act. See 28 U.S.C. § 3201.
Special care should be taken to ensure that the judgment is perfected as a lien by filing a certified copy of the abstract of the judgment in the manner in which a notice of tax lien would be filed under paragraphs (1) and (2) of 26 U.S.C. § 6323(f) of the Internal Revenue Code of 1986. A lien should be filed in accordance with state law filing requirements and should be filed in any state where the debtor owns real property.
[updated September 2014] [cited in USAM 3-9.100]
3-10.210 - Bill of Cost
Upon entry of a judgment, the Financial Litigation/Asset Recovery Unit should present a Bill of Cost to the Clerk of the United States District Court. See 28 U.S.C. § 1920.
The amount of any costs taxed by the clerk shall be included in the letter notifying the agency of entry of judgment. A Bill of Cost should also be presented for the recovery of any subsequent costs and the agency promptly informed of the amount of such costs once taxed by the clerk.
3-10.220 - Notice of Entry of Judgment to Client Agency
The client agency shall be promptly notified of the entry of the judgment. Upon request, the Financial Litigation/Asset Recovery Unit shall provide a copy of the judgment to the agency. The letter of notification should contain the necessary information to enable the agency to update properly their records and maintain accurate account balances. The letter will also serve as a request for any supplemental ability to pay information which the agency may have obtained subsequent to referring the claim.
3-10.230 - Postjudgment Demand
Immediately following expiration of the 14-day automatic stay after entry of the judgment, see Fed. R. Civ. P. 62(a), a letter shall be mailed to the debtor providing notice of entry of the judgment and demanding payment in full within a time certain. The period of time established for full payment from the debtor shall not exceed 30 days from the date of the letter.
The date by which full payment should be received from the debtor shall be entered into the Department-wide debt collection tracking system to ensure timely follow-up. If full payment or an appropriate offer to repay is not received by this date, enforced collection proceedings shall be immediately initiated.
3-10.300 - Installment Payment Plans
An installment payment plan shall be established only when the debtor is unable to make payment in full, or to obtain suitable financing from a private institution in order to make payment in full. Establishment of an installment payment plan shall not be considered unless and until a financial statement has been fully completed and signed by the debtor. Under no circumstances shall an installment payment plan be agreed to, or the terms and conditions of any plan be discussed, with the debtor prior to receiving a financial statement. All financial information provided must first be reviewed by Financial Litigation/Asset Recovery Unit personnel to determine whether a payment plan would be appropriate and, if so, to ensure that the maximum monthly payment amount is obtained and the judgment is liquidated at the earliest possible date.
[updated September 2014] [cited in USAM 3-10.400]
3-10.400 - Receipt of Payments by United States Attorneys' Office
All payments made by or on behalf of a debtor in a civil case, including prejudgment settlements, are to be made payable to the United States Department of Justice. Most payments will be mailed to the Direct Deposit (Lockbox) System for deposit; others will be processed through electronic debit from a checking or savings account; or by credit card or debit card using the Pay.Gov Online Payment Website; or if the payment is more than $50,000 using Electronic Funds Transfer - FedWire (with the exception of environment and natural resources cases in which the minimum payment for using Electronic Funds Transfer - Fedwire is $10,000).
All judgments in payment status, other than bankruptcy cases, see USAM 3-10.410, shall be retained by the United States Attorney's office until fully satisfied. This policy does not affect in any way the return of uncollectible judgments to the agencies for surveillance or the return of marginal cases if payments will never meet the requirements of USAM 3-10.300.
[updated September 2014] [cited in USAM 3-10.410]
3-10.410 - Return of Certain Bankruptcy Cases to Agencies for Collection
A policy different from that set forth above, at USAM 3-10.400, has been established for certain bankruptcy cases under chapters 11, 12 and 13 of title 11, in which there is a confirmed plan which provides for payment to the government. After confirmation of a plan takes place, the case shall be returned to the agency for monitoring and collection.
If special circumstances exist in a particular case which indicate that there is a likelihood of the debtor, or debtor in possession, defaulting on its terms of payment to the government under the plan, or other problems exist relating to timely payment or timely notification of default, the United States Attorney's office may continue to handle the case while monitoring its plan for compliance. At such time as these special circumstances no longer exist, the United States Attorney's office shall return the case to the agency for continued collection.
An exception to the policy of returning cases to the referring agency arises when the United States Attorney's office has reason to believe that there has been fraud or conversion of government property in a bankruptcy case. The case should then be referred to the civil division of the United States Attorney's office for screening, in order to determine whether measures may be taken that would provide for additional civil collections, or if it should be forwarded to the criminal division of the United States Attorney's office for possible prosecution.
The United States Attorneys' offices and referring agency representatives should coordinate locally to ensure that any bankruptcy case returned to the agency can and will be handled properly. A brief letter must accompany each returned case. This letter shall advise the agency of its responsibility for collection and processing payments under the debtor's plan, and for returning the case to the United States Attorney's office within 30 days of a default by the debtor on the terms of payment under the plan for purposes of litigation and enforcement. The letter should include the debtor's full name, the agency's file number, the scheduled payment amount pursuant to the confirmed plan, and the scheduled payment date.
[cited in USAM 3-10.400]
3-10.500 - Enforced Collections
When a debtor fails to respond to the postjudgment demand letter or to cure a default on the terms of an established payment plan, immediate steps shall be taken to initiate enforced collection proceedings. The rights and remedies available to the United States, and exemptions available to the debtor, under the Federal Debt Collection Procedures Act, 28 U.S.C. §§ 3001-3308, should be considered in determining the most efficient and effective means to satisfy the judgment.
[cited in USAM 3-12.350]
3-10.510 - Discovery to determine ability to pay
Full use shall be made of those discovery methods provided for in the Federal Rules of Civil Procedure whenever financial information is not voluntarily provided by the debtor. If the debtor fails to respond to such discovery requests, those sanctions provided for under the Federal Rules of Civil Procedure shall be pursued promptly and vigorously. All financial information which is obtained through discovery shall be thoroughly reviewed and a determination made on how to proceed to enforce the judgment.
3-10.520 - Federal Debt Collection Procedures Act Tools
The Federal Debt Collection Procedures Act provides the exclusive civil procedures the United States must utilize for prejudgment and postjudgment debt recovery. Enforcement of unpaid debts shall be aggressively pursued in accordance with the Federal Debt Collection Procedures Act, 28 U.S.C. §§ 3001-3308.
3-10.530 - Offset
Offset of a debtor's federal tax refund, federal salary, federal or military retirement , and any other non-exemp federal administrative benefit should be undertaken whenever permitted by law.
3-10.540 - Depriving Debtors of Their Residence
Approval of the United States Attorney should be obtained prior to executing upon a debtor's residence. Normally, execution on a debtor's residence should not be made if the debtor is cooperative and making reasonable efforts to satisfy the judgment. Similarly, execution upon the debtor's personal or real property should not result in the debtor's family becoming a public charge.
3-10.600 - Transfers
Civil postjudgment debts should not be transferred to another district simply because the debtor resides in another district. The nationwide enforcement provision of the Federal Debt Collection Procedures Act, 28 U.S.C. § 3004(b), can be used to enforce collection in another district. A debt should be transferred to another district if it is in the best interests of the United States to do so (e.g., state law preclude the United States from using the Federal Debt Collection Procedures Act enforcement provisions). See USAP 3-9.100.001.
3-10.610 - Assists
Instances will arise when a Financial Litigation/Asset Recovery Unit requires the assistance of another United States Attorneys' office to help collect on a judgment. For example, an "assist" might be needed when: (1) a debtor has assets or is employed in another district and the assistance of that district is needed to attach the debtor's assets or garnish the debtor's wages; (2) there are multiple debtors on one debt and they reside in other districts; or (3) to obtain essential information necessary to utilize Federal Debt Collection Procedures Act provisions. See USAP 3-9.100.001.
3-10.700 - Terminating Civil Postjudgment Collection Action—Suspension of Collection Action
In some instances the prospect of obtaining a substantial sum through enforced collection proceedings will be so poor that continuation of such efforts would be futile. At the same time, however, future prospects for enforcing collection may be such that the judgment cannot be considered permanently uncollectible. With the approval of the Assistant United States Attorney responsible for financial litigation, collection action on such judgments may be suspended.
Updated financial information on suspended civil debts should be obtained and a re-evaluation of the debtor's ability to pay should be made annually. Judgments should not be retained in a suspense status for more than two years. If a determination is made that a judgment remains uncollectible after making timely, periodic reviews of the debtor's financial situation over a two-year period, the judgment should be returned to the agency for surveillance or closed as uncollectible.
3-10.710 - Returning Case to Agency
Many judgments which are deemed presently uncollectible may have future collection potential. For example, the debtor may be young or well educated, or may inherit wealth. When this situation exists, a decision must be made on whether to suspend collection action or to return the judgment to the agency for surveillance. By necessity, this decision must be made on a case-by-case basis, giving due regard to the judgment amount, the posture of the debtor, the likelihood for improvement in the debtor's financial situation over time, and the effectiveness of those judgment enforcement remedies available under the Federal Debt Collection Procedures Act.
When the judgment is presently uncollectible but has future collection potential, and the United States Attorney is not in a better position than the agency to keep the matter under surveillance, the judgment should be returned to the agency for surveillance. The transmittal letter returning the judgment to the agency for surveillance shall 1) advise the agency that if the debtor's financial situation improves or an enforcement action becomes practical, the agency should re-refer the case to the United States Attorney for legal action, 2) inform the agency of the date on which the judgment lien will expire and request that the United States Attorney be notified in writing six months prior to that date if the agency wishes to have the judgment lien renewed; and, 3) remind the agency to notify the United States Attorney's office if the agency writes off the debt and issues a 1099 or if the debt is paid in full.
A judgment case should be closed by the United States Attorney's office whenever current financial information reveals that the present and future prospects of collecting a substantial amount are so poor that the reasonable probability is against realizing a net gain over the expenditure of money and resources required to keep the case in an open status. The transmittal letter to the agency closing the case as uncollectible should include the same information as required inabove. Upon receipt of notification from the agency that the debt has been written off or paid in full, the United States Attorney's office shall release any liens filed against the debtor.
[updated September 2014]