Professional Documents
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Dod 7000.14-R Financial Management Regulation Volume 5, Chapter 28
Dod 7000.14-R Financial Management Regulation Volume 5, Chapter 28
14-R
2B Financial Management Regulation Volume 5, Chapter 28
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Table of Contents
2801 OVERVIEW................................................................................................................... 6
2803 DEBT COLLECTION AND RECOVERY TOOLS FOR DELINQUENT DEBTS .... 8
280401. General Requirements for Debt Notification and Demand for Payment ........... 10
*280402. Demand Letters .................................................................................................. 10
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Table of Contents (Continued)
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Table of Contents (Continued)
Table 28-1. DoD Financial Management Regulation Volumes and Chapters on Debt
Collection................................................................................................................................... 44
Table 28-2. Selection of Hearing/Reconsideration Officials for DoD Component Debts ....... 45
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Table of Contents (Continued)
Figure 28-2. Defense Debt Management System (DDMS) Debt Processing Steps ................. 47
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CHAPTER 28
2801 OVERVIEW
280101. Purpose
This chapter provides an overview of the requirements for debt management and
collection of individual debts within the Department of Defense (DoD).
280102. Scope
Policies and procedures in this chapter apply to administrative actions associated with the
collection and disposition of individual debts owed to the United States and collected by DoD.
This chapter does not apply to collection of debts owed by contractors, vendors, assignees, state
and local governments, or foreign governments. Nor does this chapter apply to the collection of
child support, alimony, or commercial debts from the pay or salaries of DoD civilian employees
or military members through garnishment or involuntary allotment. This chapter also does not
apply to antitrust, fraud, tax, and interagency claims. Refer to Table 28-1 to determine the
applicable volume and chapter for guidance on collection of debts not covered by this chapter.
All organizations involved in the collection and management of individual debts will
establish and maintain internal controls to ensure debts owed to DoD are aggressively managed
and collected in accordance with this chapter and other applicable regulatory and statutory
requirements.
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otherwise provided for by specific Federal Agency statutes or regulations, or by Title 11 of the
United States Code (U.S.C.), when the debt involves bankruptcy. The FCCS also prescribes
standards for referring debts to the Department of Justice (DOJ) for litigation. Rules governing
the use of certain debt collection tools under the “Debt Collection Improvement Act of 1996,”
such as administrative wage garnishment, are also issued in 31 C.F.R. 285.
The DoD Components must establish and maintain a debt management program to
identify, recover, and collect debts owed by individuals to the United States, as appropriate. The
recovery of debts must be undertaken promptly, using a strategy that is determined to result in
maximum recovery of debt within acceptable costs. Debtors must be afforded appropriate due
process in accordance with this and applicable regulations and 31 C.F.R. 901.3(b)(4). The DoD
Components must clearly designate the official(s) responsible for the recovery and collection of
individual debts within the DoD Component. Guidance must be established that clearly assigns
responsibilities for processing, monitoring, reporting, and closing out individual delinquent debts
throughout the entire debt collection process.
Debt Collection Offices (DCOs) must take prompt and aggressive action to recover and
collect debts owed to DoD and to the United States and must pursue continuing follow-up
actions, as necessary, to ensure that debts owed to DoD and to the United States are collected.
The DoD Components must institute procedures and assign responsibility to designated
personnel as necessary to ensure that all appropriate personnel and organizations (e.g., personnel,
entitlement, payroll, finance and accounting, disbursing, and legal offices) are promptly notified
and kept apprised of any activities that potentially could give rise to indebtedness by any
member, employee, or other personnel based on employment or other financial or contractual
relationship between DoD and the indebted individual(s). The DoD Components must maintain
continuous communication and follow-up to prevent inadvertent indebtedness to remain
unresolved for an extended period.
Debts may be paid in the form of money, or, when a contractual basis exists, demand
may be made for the return of specific property or the performance of specific services. Debts
otherwise may be resolved by law, regulation, contract, or agreement.
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agencies and credit bureaus, to facilitate the collection of delinquent debts owed by current and
former DoD civilian employees and military members.
DoD's failure to comply with FCCS does not create any right or benefit, substantive or
procedural, enforceable by law or in equity by a party against the United States, its agencies, its
officers, or any other person. Refer to 31 C.F.R 900.8.
Guidance for recording associated accounts receivable transactions for individual debt is
in Volume 4, Chapter 3.
280301. General
This section contains information on debt collection remedies and procedures, including
those specified in the “Debt Collection Improvement Act” and FCCS. Nothing contained in this
chapter, however, precludes the use of any other administrative remedies that may be available
under other statutes, regulations, or DoD’s common-law rights for the collection or disposition of
delinquent debts. These remedies generally do not apply to debts arising under, or payments
made under, the “Internal Revenue Code of 1986,” the “Social Security Act” (except to the
extent provided under 42 U.S.C. 404, and 31 U.S.C. 3716), or tariff laws of the United States.
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B. Liquidation of collateral;
C. Collection in installments;
DCOs must request payment of debts, along with penalties, administrative charges, and
interest in one lump-sum amount, whenever possible. Lump-sum collection is the preferred
collection method. Lump-sum collections by offset from current pay or salary, unless voluntary,
cannot exceed the percentages specified in Volume 7A, Chapter 50, Volume 7B, Chapter 28, and
Volume 8, Chapter 8, and other applicable regulations.
DCOs may, when necessary, collect the money before giving due process. For example,
appropriate collection action(s) may precede written demands for payment when necessary to
protect the DoD Component’s interests and to prevent the applicable statute of limitations from
expiring. Due process should be completed as expeditiously as possible after collection.
2804 NOTIFICATION TO DEBTOR
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280401. General Requirements for Debt Notification and Demand for Payment
FCCS requires the issuance of a minimum of one demand letter. That requirement may
be a single, all-inclusive demand letter or several successive and progressively stronger demand
letters depending on the type and amount of the debt and the debtor’s response to collection
efforts. Use demand letters to expedite the resolution and collection of debts or arrive at the
earliest practicable decision on the final disposition or referral of debts to DOJ for litigation. In
determining the timing of the demand for payment, give consideration to the need to refer
delinquent debts promptly to DOJ for litigation.
DCOs must issue the initial demand letter within five working days following
confirmation of the debt, the basis of indebtedness, and the amount of the debt. DCOs must
exercise care to ensure that demand letters are mailed or hand-delivered on the same day that
they are dated. Demand letters will inform the debtor of the following information and
requirements:
B. The applicable standards (e.g., 31 C.F.R. 901.9) upon which any interest,
penalties, or administrative charges are based.
C. The date by which payment must be made in order for the debtor to avoid
late charges and enforced collection (that date generally will not be more than 30 days from the
date the demand letter is mailed or hand-delivered).
E. Remedies that DCO will use to enforce payment of debts may include:
3. Allotments;
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5. Tax refund and administrative offset (through the Department of
the Treasury Offset Program);
7. Collection agencies;
9. Litigation.
DCOs must respond promptly to communications from debtors, normally not later than
30 days from the date of receipt of the debtor’s correspondence. DCOs must advise debtors who
dispute debts to furnish available evidence to support their position. Refer to section 2810 for
information on reconsiderations and hearings. When it becomes necessary to extend the 30 day
notice/written demand period, DCO must act promptly to facilitate a possible referral/request for
debt litigation from DOJ within 1 year of the most recent debt delinquency event.
Title 31, U.S.C., section 3717 and FCCS authorize the assessment of interest, penalty,
and administrative charges on delinquent debts. All interest, penalty, and administrative charges
on delinquent debts must be calculated and recorded in the DoD Component accounting system.
Refer to Volume 4, Chapter 3, Annex 1 for guidance on assessing these charges and possible
waiver of these charges.
If a debtor informs DCO that financial constraints prevent payment of a debt in one
lump-sum, then payments may be accepted in regularly scheduled installments. If the debtor
submits financial statements, then make those documents a part of the debtor’s permanent debt
file. DCO will base a decision to accept installment repayment of a debt on a review of the
debtor’s financial statement(s) or independent verification of the debtor’s reported financial
position and the following factors:
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B. Present and potential income;
C. Inheritance prospects;
F. Reasonable and necessary living expenses for the debtor and the debtor’s
dependents.
DCOs that agree to accept installment payments must obtain signed, legally enforceable
repayment agreements from the debtor. Such agreements must specify the terms agreed upon by
the parties, including a provision accelerating the debt, and requiring that the remaining debt
balance must be due and payable immediately upon the debtor’s default on the agreement. As
part of the agreement, require the debtor to submit financial statements annually, as necessary,
whenever the repayment period exceeds three years. DCOs must accept installment payments,
notwithstanding a debtor’s refusal to execute a written agreement or to provide security.
DCOs accepting installment payments for multiple debts of a debtor must apply the
payments to the various debts owed to DoD according to the best interests of DoD and in
accordance with FCCS. Unless otherwise prescribed by statute or regulation, DCOs will collect
debts owed to more than one DoD Component or Federal Agency in the following priority
sequence (within each component, collect the oldest debt first):
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B. Debts owed to other DoD Components; and
A. Penalty charges;
B. Administrative charges;
DCOs that collect debts by installment must review the debtor’s annual financial
statements and determine whether to collect the balance due in a lump-sum or continue the
installment payment agreement at the same or increased amounts. Smaller installment payments
may be accepted at the request of a debtor, on an exception basis, when a request is supported by
financial data confirming the debtor’s inability to pay the full amount of the agreed upon
installment payment. DCOs normally must not reduce installment payments if a determination is
made that the debtor could have controlled the financial condition that reduced the debtor’s
ability to meet existing installment payment requirements.
280801. General
This chapter implements the administrative offset authority in 31 U.S.C. 3716 and FCCS
for collecting delinquent debts owed to the United States. Debts owed to DoD or other Federal
agencies by current or retired members of the military or current or retired DoD civilian
employees that can be collected through salary offset must be collected as provided in Volume
7A, Chapter 50; Volume 7B, Chapter 28; and Volume 8, Chapter 8. Debts determined to be
owed to the United States that must be collected administratively other than through salary offset
must be collected under the authority of 31 U.S.C. 3716 and FCCS applying the procedures in
this section.
Under 5 U.S.C. 5705, when making collections of unearned advance per diem or mileage
allowances, DCOs must give DoD civilian employees the opportunity to immediately pay the
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amount due. If immediate payment is not made, then full offset, if it does not cause undue
financial hardship, must be made immediately against accrued pay, retired pay, or any other
amount due the civilian employee from the United States. If the civilian employee does not pay,
or if there is no amount available for offset, then DCO must follow all other appropriate debt
collection provisions of this Regulation. DCOs should inform employees of the requirement for
immediate repayment of unearned advances of per diem and mileage allowances at the time that
advances are made. Hearings are not required, but DCOs must reconsider debts upon request of
the debtor.
Under 10 U.S.C. 2775, administrative offset is authorized to pay for the cost of repair,
replacement, or cleaning of military housing caused by the abuse or neglect of military members.
Hearings are not required for debts being collected by administrative offset under this statute.
All other provisions for administrative offset apply to collection of these debts. DCOs must
reconsider these debts upon request of the debtor.
Under 37 U.S.C. 1007, administrative offsets are authorized to collect debts that
administratively are determined to be owed to a DoD Component by a military member. Except
where there are questions of debt validity or truthfulness, hearings are not required before
collection of debts by administrative offset under this statute. Policies and procedures for
collecting routine pay adjustments under this statutory authority are in Volume 7A, Chapter 50
and Volume 7B, Chapter 28.
Under 5 U.S.C. 5514, DCOs may initiate salary offset to collect indebtedness by
installment deductions. Refer to Volume 7A, Chapter 50; Volume 7B, Chapter 28; Volume 8,
Chapter 8; and Volume 13, Chapter 8 for salary offset procedures under this statute. This
statutory authority must be used to collect indebtedness of military members, DoD civilian
employees, and nonappropriated fund instrumentality (NAFI) employees from their current pay
or salary accounts when offset is not authorized or required by other more specific statutes.
Unless otherwise provided by this or other Regulation, the paying office must ensure that the
debtor has received due process before the current pay or salary can be involuntarily offset to
satisfy a debt to the United States. The right to a hearing conducted by an independent hearing
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official is one of the due process protections afforded an individual under this statute. Refer to
section 2810 of this chapter for guidance on hearings. Debts owed by individuals to agencies
other than DoD Components are sent by those agencies to the Department of the Treasury’s
Federal Offset Program for processing. Additional guidance pertaining to the Department of the
Treasury’s offset program can be found at: http://www.fms.treas.gov/debt/top.html.
Nothing contained in this chapter must prevent the collection of indebtedness under the
common law within the statutory period allowed, utilizing any available statutory authority not
covered herein.
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prior to the removal of the time limit, may now be collected by administrative offset, without any
time limitation. Debts more than 10 years delinquent as of December 31, 2009, that were
previously ineligible for collection may now be collected by administrative offset provided
additional notice and due process requirements are met. Refer to subparagraph 280808.B.3 of
this chapter.
a. Written notice of the basis and the amount of the debt and
the intent to use administrative offset to collect the debt after 30 calendar days from date of the
notice, unless a written response is received from the debtor requesting a hearing or debt
determination reconsideration or the debtor provides supporting or mitigating
statements/documents or repayment. Debts referred to the Treasury Offset Program (TOP)
require 60 day notice prior to referral.
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i. Statement that any amounts paid or administratively offset
from a payment for the debt that are later waived or found not owing will be promptly refunded
unless prohibited by law or contract.
NOTE: When the preceding conditions are present, afford the debtor an opportunity for review
as soon as practicable and promptly refund any money offset to collect an indebtedness
ultimately found not to have been owed.
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7. When a debtor previously has been given any of the required
notice and review opportunities with respect to a debt, there is no need to duplicate these before
initiating administrative offset with regard to that debt, except as provided in subparagraph
280808.B.3. Accomplish administrative offset as funds or monies become due and payable to a
debtor after consideration is given to administrative offset requirements.
2. The request must include certification that the debtor owes the debt
and that requesting DCO has fully complied with regulatory requirements concerning
administrative or salary offset.
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280810. Department of the Treasury Centralized Administrative Offset Program
The FMS, Department of the Treasury, has broad administrative offset collection
responsibilities for delinquent debts based on the “Debt Collection Improvement Act of 1996,”
as codified at 31 U. S. C. 3711(g). The DoD Components are required to refer legally
enforceable debts over 180 days delinquent to the Department of the Treasury for continued
collection action. Refer to paragraph 281204 for additional information.
280811. Administrative Offset From the Civil Service Retirement and Disability
Fund (CSRD) and the Federal Employee Retirement System (FERS)
Procedures for requesting offset from CSRD or FERS for debts owed by retired DoD
civilian employees are contained in Volume 8. Requests for offset forwarded to the Office of
Personnel Management in accordance with Volume 8 must not be referred to the Department of
the Treasury under paragraph 280809 or 281204 of this chapter since this action would result in
duplicative offset requests. These debts, however, are eligible for all other collection processes.
280901. General
Individual out-of-service indebtedness occurs when the debtor is not receiving salary or
other payments from DoD that can be offset to collect existing debt owed to DoD. Individual
out-of-service debts may arise from overpayments, erroneous payments, indebtedness by the
public for use of DoD’s facilities or services, or indebtedness by individuals previously serving
in or employed by a DoD Component.
The DoD Components not supported by DFAS may obtain debt collection services from
DCMO. The DoD Component and DCMO must document the services to be provided using a
Support Agreement (DD Form 1144).
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A. DCO Responsibilities. DCO is the office responsible for initial debt
collection and due process actions. DCO may be part of the DoD Component’s supporting
accounting office or a separate organizational element within the DoD Component. DCO will:
1. Issue the initial bill, invoice, notice, or demand letter to the debtor
and take appropriate follow-up action. Only one demand letter is required; however, DCOs may
issue additional follow-up notices to the debtor as deemed appropriate. Refer to section 2804.
2. Complete any previously initiated actions such as reclamation,
appeal, litigation, or foreclosure before referring delinquent individual out-of-service debts to
DCMO.
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g. The amount of accrued interest, administrative charges, and
penalty fees.
10. Maintain names, official addresses, and contact information for all
witnesses to the events leading to the debt and copies of and location of physical evidence
(documentation and other evidence) relating to the debt for payroll debts involving fraud,
misrepresentation, or credibility, and for all non-payroll debts. This information is necessary in
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the event that the debt must be referred to DOJ for litigation.
11. Follow up with DCMO to obtain the status of the referred debt
when 60 days have elapsed from receipt of the duplicate copy of the transmittal letter and no
additional information has been received.
12. Mail payments received from a debtor after the debt was referred
to DCMO to DCMO, DFAS-IN, Department 3300 (ATTN: Case Management), 8899 E. 56th
Street, Indianapolis, IN 46249-3300. Include the debtor’s name and Social Security number so
the proper account can be credited.
3. Determine the effective date for entering the debts into DDMS,
annotate the effective date on the duplicate copy of the transmittal letter, and return the duplicate
copy of the transmittal letter to DCO.
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Treasury Report on Receivables (TROR), and provide the required footnote. Refer to Volume 4,
Chapter 3 for specific reporting requirements.
Uncollectible debts on the Master Military Pay Account (MMPA) for Active Component
(AC) and Reserve Component (RC) service members due upon separation or retirement, as well
as debts for offset from retired pay, or annuitant pay periodically are systemically referred to
DCMO. Once these system-generated debts are entered in DDMS, they are treated the same as
collection action(s) taken on installation-generated debts. Defense Retiree and Annuitant Pay
System (DRAS) debts are created when payments are made after the entitlement has ended.
Those debts are transferred each month by an interface between DRAS and DDMS.
281001. General
E. DCO will refer all requests for hearings received from DoD military
members, DoD civilian employees, and NAFI employees to DFAS, DFAS/JFEA-IN, 8899 East
56th Street, Department 3300 (ATTN: Hearings), Indianapolis, IN 46249-3300.
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DCMO must provide an administrative hearing.
C. At least 3 working days before an oral hearing, the debtor must give the
hearing official and DCMO the name of his or her representative, if one is selected, copies of any
records that he or she plans to introduce if the records are different from those in the possession
of DCMO, and a list of any witnesses, along with a summary of their anticipated statements.
F. During oral hearings, debtors may not raise any issues not previously
raised with the hearing official and DCMO nor may they introduce any facts or records not
previously submitted.
A. DCO Responsibilities
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were reconsidered, indicate whether the debtor’s contentions were accepted in whole or in part,
specify the debt amount now owed, and, if applicable, reaffirm DCO’s intent to collect the debt
by administrative offset.
2. When the debtor requests a hearing, DCO will forward the request
to DCMO. Refer to paragraph 281001.E.
B. DCMO Responsibilities
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subparagraph 281001.E of this chapter, all requests for hearings will be forwarded to DCMO.
C. Except for oral testimony, the only evidence permitted at oral hearings
must be that already furnished as prehearing submissions.
D. Debtors must not raise any issues at oral hearings not previously raised
with DCMO.
E. The hearing official must issue a written decision to the debtor within
30 days after the date of the hearing. The hearing official may extend this deadline. A hearing
official’s decision must be final for the purposes of 31 U.S.C. 3716 and must discuss the basic
facts documenting the debt and will include conclusions concerning the basis and amount of the
debt.
F. Hearing officials will review debtors’ submissions received not later than
three working days after the due date to determine if debtors forfeited their hearing right. If
debtors show good cause, then this right will not be forfeited due to minor submission delays.
Upon learning that a bankruptcy petition has been filed with respect to a debtor, before
taking any further collection action, DCO must obtain legal advice concerning the impact of the
Bankruptcy Code (Title 11) on any pending or planned collection action. In most cases,
collection action should stop immediately unless it is determined that the automatic stay imposed
at the time of filing pursuant to 11 U.S.C. 362 has been lifted or is no longer in effect.
After obtaining legal advice, a proof of claim in most cases should be filed with the
bankruptcy court or the trustee. Attorneys should be aware of and provide advice, as necessary,
relating to the consequences on sovereign immunity of filing a proof of claim under the
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provisions of 11 U.S.C. 106.
A secured creditor may seek relief from the automatic stay regarding its security, subject
to the provisions and requirements of 11 U.S.C. 362.
Offset is stayed in most cases by the automatic stay. DCOs must seek legal advice
regarding initiation of action to freeze payments to the debtor and payments to other agencies
available for offset pending relief from the automatic stay from the bankruptcy court. DCOs also
must seek legal counsel regarding the possibility of recoupment.
B. Documentation
3. DCO must complete all sections of CCLR appropriate for the debt
being referred and furnish such other information as required by DOJ. Include as attachments to
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CCLR a completed checklist or brief summary of actions taken to collect or resolve the debt and
an explanation for the omission of any administrative collection action required by FCCS, or this
chapter. If a debtor’s address is unknown, then include a list of the debtor’s prior known
addresses and an explanation of actions taken to locate the debtor. Include with the debt referral
the debtor’s latest credit history data, such as a commercial credit report, balance sheet, or
financial statement submitted by the debtor. Also indicate whether there is reasonable prospect
of enforcing debt collection.
3. The debtor has the ability to pay the debt and the Government
effectively can enforce payment with due regard for the exemptions available to the debtor under
federal and state law and the judicial remedies available to the Government.
E. Preservation of Evidence. Preserve all debt files and records that may be
needed by DOJ to prove its case in court. Include certified copies of the documents that form the
basis for the debt in the debt referral package. Provide originals of the documents if requested by
DOJ.
F. Contact With Debtor After Referral. Once a debt has been referred to
DOJ, DCO personnel must refrain from contact with the debtor regarding the debt. DCOs must
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refer debtors raising questions to the appropriate DOJ office and must notify DOJ immediately of
any payments received by DCO on referred debts in accordance with DOJ guidance.
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determined without regard to the amount actually collected under the contract, but only to the
extent that funds are made available in advance in appropriations.
B. Due Process. Before reporting debts to credit bureaus, DCOs must ensure
that the due process requirements have been met. Duplication of previously provided due
process notice(s) or opportunity for review with respect to a particular debt is not required prior
to reporting the debt to the credit bureau as long as the following requirements have been met:
b. That, within not less than 60 days after sending the notice,
DCO intends to disclose to a credit bureau that the debtor is responsible for the debt;
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repayment plan that the debtor has signed and the DoD Component or DCO has agreed to; or
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government creditor organizations is maintained and updated. Before FMS disburses a payment,
it makes a comparison to determine whether the payment should be offset to satisfy a payee’s
delinquent debt. As necessary, the Department of the Treasury determines, in the best interest of
the United States, how funds collected must be applied to multiple debts. Additional information
on TOP can be found at https://www.fms.treas.gov/debt/top.html.
2. Some payments are prohibited by law from being offset and are
exempt from centralized administrative offset. For example, certain payments under the “Social
Security Act,” “Black Lung Benefits Act,” and “Railroad Retirement Board Act” are generally
exempt, unless the Department of Treasury issues regulations permitting offset. In addition, the
Department of the Treasury can exempt offset of means-tested benefit payments (programs
wherein eligibility for beneficiary payment is based on the need to maintain a certain standard of
living) and other classes of payments based on a determination that offset would not be in the
best interest of the United States. An example would be administrative offset to collect a debt
where the offset would tend to interfere with or defeat the purpose of a government payment
program.
D. Offsets for State Debts. Under 31 U.S.C. 3716(h), the Department of the
Treasury may enter into reciprocal agreements with states for federal disbursing officers to
collect state debts through offset of federal payments and for state disbursing officers to collect
federal debts through offset of state payments. Thus, as a result of Department of the Treasury
and state government agreements and implementing regulations, offsets of state debts certified to
Department of the Treasury may be paid to states and DoD may receive requests from
Department of the Treasury to offset payments to satisfy debts due to states.
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verification (5 U.S.C. 552) for administrative offset under this paragraph upon receipt from a
DCO that the due process requirements in subparagraph 280808.B have been met. The
certification of a debt in accordance with subparagraph 280904.A.6 will satisfy this requirement.
If the Department of the Treasury grants such a waiver, then only the Department of the Treasury
Data Integrity Board is required to oversee any matching activities in accordance with
31 U.S.C 3716(f).
281301. General
Debts must not be subdivided to avoid monetary ceilings for debt compromise,
suspension, or termination of collection actions. A debtor’s liability arising from a particular
transaction must be considered a single debt in determining if a debt is greater than $100,000,
between $100,000 and $500,000, or over $500,000 for purposes of compromise, suspension, or
termination. The amounts are exclusive of interest, penalties, and administrative costs.
281303. Compromise
A. General. Compromise is the acceptance of less than the full amount of the
debt in satisfaction of the entire amount of the debt. Any debt based in whole or in part on
conduct in violation of the antitrust laws, or any claim involving fraud, the presentation of a false
claim, or misrepresentation on the part of the debtor or any party having an interest in the debt,
will not be compromised. Refer these debts promptly to DOJ. DCOs will take no further action
on debts referred to DOJ. If such debt is otherwise below the threshold for DOJ referral, then
DOJ may retain the debt or may return the debt with instructions for further handling. Refer to
31 C.F.R. 902 for additional guidance on when a compromise may be approved.
B. Approval Authorities
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the Department of the Treasury in its cross-servicing program.
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a. Current financial statement from the debtor;
F. Compromise With Joint and Several Liability. When two or more debtors
are jointly and severely liable, collection must be pursued against all debtors, as appropriate. Do
not attempt to allocate payment of the debt between debtors, but proceed to liquidate the debt as
quickly as possible. A compromise agreement with one debtor will not release the indebtedness
with the remaining debtors. The amount of a compromise with one debtor should not be
considered a precedent or binding in determining the amount that would be required from other
jointly or severally liable debtors.
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compliance may be compromised so long as no present or future harm is done to standards for
enforcement, deterrence, or compliance.
B. Approval Authority
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C. Suspension of Collection Action. Suspend collection action on a debt
when any of these conditions arise:
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provides that military members subject to deductions from pay under that section may request a
delay in the start of the repayment requirement to recover the indebtedness. Before beginning
deductions from pay, DCO will consider the reasons provided by the military member for the
requested delay, including the financial ability of the service member to repay the indebtedness,
and the hardship that immediate collection would impose on the military member and the
military member’s dependents.
(1) the end of the 180 day period beginning on the date
of the completion of the military member’s tour of duty in the combat operation or combat zone;
or
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281305. Termination of Collection Actions
B. Approval Authorities
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5. Enforced collection is barred by any applicable statute of
limitations;
3. Offsetting against future income or assets not available at the time of termination
of collection activity; and
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and specifying the reasons for referral. Refer to paragraph 281201 of this chapter for guidance
on preparation and submission of CCLR.
Under 31 U.S.C. 3711 (f)(1), when deemed appropriate, the Secretary of Defense has
the authority to suspend or terminate an action by the Secretary or by the Secretary of a military
department to collect a claim against the estate of a service member who died while on active
duty with the Army, Navy, Air Force, Marine Corps, or Coast Guard during a period when the
Coast Guard is operating as a service in the Navy.
281401. General
Various actions within the debt collection process may require DCO to make decisions
based on the financial position of the debtor.
The following information may be considered when determining the financial position of
the debtor:
A. Income from all sources and expenses for the debtor, spouse, and
dependents;
B. The extent that assets of the debtor, spouse, and their dependents are
available to meet the offset and essential subsistence expenses;
D. The extent to which a debtor or spouse can borrow money to meet the
offset and minimum subsistence expenses; and
E. The extent to which the debtor, spouse, and dependents have other
exceptional expenses that should be taken into account and whether these types of expenses have
been minimized.
Refer to Volume 4, Chapter 3 of this for guidance on debt write-off and close-out.
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Title 10, U.S.C., sections 4837, 6161, and 9837 provide authority for the remission of
indebtedness due from a military member. This process is not available to DoD civilian
employees. Requests from Army and Air Force military members will be forwarded to their
respective services for processing. Requests from Navy and Marine Corps military members
will be submitted on a DD Form 2789 (Waiver/Remission of Indebtedness Application) and will
be forwarded to DFAS-IN, Department 3300 (Waiver/Remission), 8899 East 56th Street,
Indianapolis, IN 46249-3300 for processing.
Title 5, U.S.C., section 5584, 10 U.S.C. 2774, and 32 U.S.C. 716 provide authority to
waive an indebtedness which is the result of an erroneous payment of pay or allowances or an
erroneous payment of travel, transportation or relocation expenses and allowances. All requests
for waiver of indebtedness for DoD civilians (current and retired) and military members (active,
reserve, retired and National Guard) will be submitted on a DD Form 2789 and will be
forwarded to DFAS-IN, Department 3300 (Waiver/Remission), 8899 East 56th Street,
Indianapolis, IN 46249-3300 for processing. Refer to DoD Instruction 1340.23, “Waiver
Procedures for Debts Resulting from Erroneous Pay and Allowances,” for additional guidance.
281701. General
The amount collected from the debtor that is subject to refund usually includes penalties,
administrative charges, and interest computed on the principal amount of the debt. Additional
fees will have to be considered for inclusion in the refund if the debt was collected by the
Department of the Treasury and/or a commercial collection agency. A debt refund might be
applied against a part, or to the entire amount, of the debt. When a debt is collected, the
principal debt amount is credited to the appropriation or other account owed the debt if the
appropriation/account is still open. If the appropriation/account is closed, then the collection
must be credited to receipt account 3200, “Collections of Receivables from Canceled Accounts.”
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A. Once DCO effects collection, the amounts received for penalty,
administrative charges, and interest are credited to a miscellaneous receipt account that is
prefixed by the appropriate departmental symbol (17, 21, 57, 96, or 97 for the Navy, Army, Air
Force, Corps of Engineers, and Defense, respectively).
B. When collection is effected through TOP, the fee added to the debt is
retained by the Department of the Treasury. The amount collected by offset (minus the amount
retained by the Department of the Treasury) is deposited to the appropriate appropriations and
accounts. If a refund is required, then the amount refunded to the debtor must be the total
amount collected by offset even, though a portion representing the Department of the Treasury’s
administrative fees was not returned to referring DCO.
A. The refund of the amounts collected for principal debt, interest, penalty,
and administrative charges should be charged to the appropriation or account that was credited
with the collection. Any amount to be refunded that was credited to an appropriation or account
that subsequently has been closed, must be charged to the current fiscal year for the same
appropriation or account as allowed by law. For example, if the original principal debt were
collected into a military pay appropriation, the associated interest and administrative fees were
collected into 3210 (General Fund Proprietary Receipts, Defense Military, Not Otherwise
Classified), and the penalty was collected in 1099 (Fines, Penalties, and Forfeitures, Not
Otherwise Classified), then the refund will be charged to these same accounts for the amounts
originally collected.
B. The refund to the debtor for fees assessed and retained by the Department
of the Treasury or private collection agencies, must be charged to the applicable DoD
Component’s current year operating funds.
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Table 28-1. DoD Financial Management Regulation Volumes and Chapters on Debt Collection
Volume 9, Chapter 8
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Table 28-2. Selection of Hearing/Reconsideration Officials for DoD Component Debts
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Figure 28-1. Debt Certification Statement
Pursuant to Title 28, United States Code, Section 1746, I certify under the penalty of perjury that
to the best of my knowledge and belief that the debts submitted herewith are delinquent, valid
and legally enforceable in the amounts stated. The debts are not subject to any circumstances
that legally preclude or bar collection, including collection by offset. Records available do not
show that any debtor owing a debt has filed for bankruptcy protection.
________________ _______________________________________
Date Signature of Debt Certifying Official
Print Name:___________________________________________
Title:_________________________________
Office Symbol:_________________________
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Figure 28-2. Defense Debt Management System (DDMS) Debt Processing Steps
YES
DAY 31 COLLEC PROCESS
ASSESS INTEREST T? COLLECTION
RETROACTIVE TO DATE
OF DELINQUENCY.
SEE NOTE 2. NO
YES
COLLEC PROCESS
T? COLLECTION
NO
NOTIFY CREDIT
DAY 62 BUREAU.
SEE NOTE 3
YES
COLLEC PROCESS
T? COLLECTION
REFER TO
TREASURY
ADD ADMINISTRATIVE FEE
OFFSET PROGRAM
(as appropriate) AND 1st PRIVATE
COLLECTION
AGENCY (PCA)
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DEFENSE DEBT MANAGEMENT SYSTEM (DDMS) DEBT PROCESSING STEPS
(Continued)
YES
COLLECT? PROCESS
COLLECTION
NO
DAY 314
ADD ADMINISTRATIVE FEE
(as appropriate) REFER TO 2nd PCA
YES
COLLECT?
COLLEC PROCESS
T? COLLECTION
NO
YES
COLLECT?
COLLEC PROCESS
T? COLLECTION
NO
YES
COLLECT? PROCESS
COLLECTION
NO
CLOSE-OUT DEBT
SEE NOTE 5.
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DEFENSE DEBT MANAGEMENT SYSTEM (DDMS) DEBT PROCESSING STEPS
NOTES:
1. The number of days depicted in this chart reflects the approximate number of days that a debt
has been recorded in DDMS.
2. Interest is accrued and assessed monthly throughout the life of a delinquent debt.
3. Debts are reported to credit bureaus no earlier than 60 days from date debtor is notified of the
intention to report the debt to a credit bureau. DCMO includes this notice in the initial letter to
the debtor (Day 2).
4. Refer to Volume 4, Chapter 3 for guidance on write-off and classification of debt as CNC.
5. Refer to Volume 4, Chapter 3 for guidance on close-out of debts.
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