4-11.000 - Civil Financial Litigation Activity
| 4-11.100 | Claims Collection Litigation Report |
| 4-11.120 | Nationwide Central Intake Facility |
| 4-11.131 | Returning Deficient Referrals |
| 4-11.140 | Filing Complaint |
| 4-11.150 | Prejudgment Agreements to Pay |
| 4-11.160 | Civil Compromise Policy |
| 4-11.200 | Civil Postjudgment Financial Litigation Activity—Perfecting the Judgment |
| 4-11.230 | Postjudgment Demand |
| 4-11.300 | Installment Payment Plans |
| 4-11.400 | Receipt of Payments by United States Attorneys' Office |
| 4-11.410 | Return of Certain Bankruptcy Cases to Agencies for Collection |
| 4-11.500 | Enforced Collections |
| 4-11.510 | Discovery to determine ability to pay |
| 4-11.520 | Federal Debt Collection Procedures Act |
| 4-11.540 | Depriving Debtors of Their Residence |
| 4-11.600 | Transfers and Assists |
| 4-11.700 | Terminating Civil Postjudgment Collection Action—Suspension of Collection Action |
| 4-11.710 | Returning Case to Agency |
4-11.100 - 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).
4-11.120 - Nationwide Central Intake Facility
All federal agencies are required to refer claims when the principal amount 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 CCLR for compliance with the Federal Claims Collection Standards, sends a demand letter to the debtor, opens a record in CDCS, 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 the NCIF: 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 CDCS.
4-11.131 - 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).
4-11.140 - Filing Complaint
Routine fully-documented referrals for debt collection action should be filed within 45 days or as soon as practicable thereafter. Incomplete referrals should be immediately declined. See
JM 4-11.131. 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. Civil Division Directive1-15. 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.
4-11.150 - 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 180 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 180 days. A claim shall remain in prejudgment status only in those instances where the debtor agrees to pay the debt in full within 180 days. In the absence of a consent judgment, if full payment is not received within the 180 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 typically 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 disfavored.
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.
4-11.160 - 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., Ch 1, Part -0, Subpart Y, App. Civil Division Directive1-15, 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 180 days. If the compromise is not paid in full within 180 days, the government’s claim must be secured by the entry of a judgment.
4-11.200 - Civil Postjudgment Financial Litigation Activity—Perfecting the Judgment
Immediately following expiration of the 14-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.
4-11.230 - 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 CDCS 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.
4-11.300 - 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 payment 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.
4-11.400 - Receipt of Payments by United States Attorneys’ Office
All judgments in payment status, other than bankruptcy cases, see JM 4-11.410 shall be retained by the United States Attorney’s office until fully satisfied. This policy does not affect the return of uncollectible judgments to the agencies for surveillance or the return of marginal cases if payments are less than the amount established by the installment payment plan pursuant to JM 4-11.300
4-11.410 - Return of Certain Bankruptcy Cases to Agencies for Collection
An exception to the policy of returning cases to the referring agency arises for certain bankruptcy cases under chapters 11, 12 and 13 of title 11, in which the Bankruptcy Court has entered an order confirming a plan which provides for payment to the government. After 14 days following entry of the order confirming the plan, See Fed. R. Bankr. P. 8002, the case shall be returned to the agency for monitoring and collection.
Another 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.
4-11.500 - 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, steps shall be taken to initiate enforced collection proceedings as soon as practicable thereafter. 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.
4-11.510 - Discovery to determine ability to pay
When a debtor fails to provide financial information voluntarily, such information should be obtained using those discovery methods provided for in the Federal Rules of Civil Procedure. 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.
4-11.520 - Federal Debt Collection Procedures Act
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.
4-11.540 - Depriving Debtors of Their Residence
Approval of the United States Attorney should be obtained prior to executing upon a debtor’s primary residence. Normally, execution on a debtor’s primary 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.
4-11.600 – Transfers and Assists
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).
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 4-9.100.001.
4-11.700 - 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 Financial Litigation Coordinator responsible for financial litigation, collection action on such judgments may be suspended. Judgments should not be retained in a suspense status for more than two years.
4-11.710 - Returning Case to Agency
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 outweighed by 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 should1) advise the agency that if the debtor’s financial situation improves or an enforcement action becomes practical, the agency shall 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. 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’s property.