[Title 31 CFR E]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 31 - MONEY AND FINANCE: TREASURY]
[Part 29 - FEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF COLUMBIA RETIREMENT PROGRAMS]
[Subpart E - Debt Collection and Waivers of Collection]
[From the U.S. Government Printing Office]


31MONEY AND FINANCE: TREASURY12002-07-012002-07-01falseESubpart EMONEY AND FINANCE: TREASURYFEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF COLUMBIA RETIREMENT PROGRAMS
          Subpart E--Debt Collection and Waivers of Collection

    Source: 66 FR 36705, July 13, 2001, unless otherwise noted.



Sec. 29.501  Purpose; incorporation by reference; scope.

    (a) This subpart regulates--
    (1) The recovery of overpayments of Federal Benefit Payments;

[[Page 307]]

    (2) The standards for waiver of recovery of overpayments of Federal 
Benefit Payments; and
    (3) The use of Federal Benefit Payments to recover certain other 
debts due the United States.
    (b) The regulations of this subpart incorporate by this reference 
all provisions of the Federal Claims Collection Standards (FCCS) (parts 
900-904 of Title 31, Code of Federal Regulations), and supplement those 
regulations by the prescription of procedures and directives necessary 
and appropriate for the operation and administration of the Retirement 
Funds. To the extent they are not inconsistent with the regulations 
contained in this subpart, the regulations in part 5 of title 31, Code 
of Federal Regulations, also apply to the collection of debts under this 
subpart.
    (c)(1) Debts based on fraud, misrepresentation, or the presentation 
of a false claim. This subpart does not apply to any overpayments of 
Federal Benefit Payments which arose, in whole or in part, due to fraud, 
misrepresentation, or the presentation of a false claim by the debtor or 
any party having an interest in the claim. Such debts should be referred 
by the Benefits Administrator immediately to the U.S. Justice Department 
for action pursuant to 31 CFR 900.3.
    (2) Tax debts. This subpart does not apply to tax debts.
    (d)(1) Sections 29.501 through 29.506 state the rules of general 
applicability to this subpart.
    (2) Sections 29.511 through 29.520 prescribe procedures to be 
followed by the Benefits Administrator which are consistent with the 
FCCS in the collection of debts owed to the Retirement Funds.
    (3) Sections 29.521 through 29.526 prescribe the standards that the 
Department will apply in decisions to waive recoupment or recovery of 
overpayments from the Retirement Funds under sections 11021(3) and 
11251(c)(2)(B) of the Act.



Sec. 29.502  Definitions.

    For purposes of this subpart--
    Additional charges means interest, penalties, and/or administrative 
costs owed on a debt.
    Administrative offset, as defined in 31 U.S.C. 3701(a)(1), means 
withholding funds payable by the United States to, or held by the United 
States for, a person to satisfy a debt the person owes the United 
States.
    Agency means:
    (1) An Executive agency as defined in section 105 of title 5, United 
States Code, including the U.S. Postal Service and the U.S. Postal Rate 
Commission;
    (2) A military department, as defined in section 102 of title 5, 
United States Code;
    (3) An agency or court in the judicial branch, including a court as 
defined in section 610 of title 28, United States Code, the District 
Court for the Northern Mariana Islands, and the Judicial Panel on 
Multidistrict Litigation;
    (4) An agency of the legislative branch, including the U.S. Senate 
and the U.S. House of Representatives; and
    (5) Other independent establishments that are entities of the 
Federal Government.
    Annuitant means a retired participant, former spouse, spouse, 
widow(er), child or other beneficiary receiving recurring Federal 
Benefit Payments.
    Annuity means the monthly benefit (including a retirement salary 
under the Judges Plan) of indefinite duration payable to an annuitant.
    Anticipated expenses means expenditures which are expected to occur 
and for which the debtor can provide documentation of the estimated 
cost.
    Beneficiary means an individual designated by a participant, or by 
the terms of the Judges Plan, Police Officers and Firefighters Plan, or 
Teachers Plan, who is or may become entitled to a benefit under those 
plans.
    Change of position for the worse means an individual would be left 
in a worse financial position after recovery of the overpayment than 
prior to the receipt of the overpayment because the individual 
reasonably relied on the amount of the overpayment to his or her 
detriment. For example, an individual has ``changed position for the 
worse'' if he or she made expenditures or assumed new liabilities that 
he or she would not have otherwise done, and he or she is unable to 
withdraw from the commitment without incurring significant financial 
loss.

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    Compromise means accepting less than payment in full in satisfaction 
of a debt.
    Consent means the debtor has agreed in writing to administrative 
offset of one or more Federal Benefit Payments after receiving notice of 
the available rights under 31 U.S.C. 3716 and this subpart; to Federal 
salary offset after receiving notice of the available rights under 5 
U.S.C. 5514 and 31 CFR part 5; and to judgment offset under section 124 
of Public Law 97-276, 96 Stat. 1195-1196.
    Credit bureau has the same meaning as the definition of ``consumer 
reporting agency'' provided in 31 U.S.C. 3701(a)(3).
    Creditor agency means the agency to which a debt is owed.
    Debt has the same meaning as the definition of ``debt'' provided in 
31 U.S.C. 3701(b)(1), and includes an overpayment of Federal Benefit 
Payments.
    Debtor means a person who owes a debt or from whom a debt is to be 
recovered, including an annuitant.
    Delinquent means delinquent as defined in 31 CFR 900.2(b).
    Department means the Secretary of the Treasury or a designee 
authorized to exercise the Secretary's authority with respect to Federal 
Benefit Payments under the Act.
    FCCS means the Federal Claims Collection Standards (parts 900-904 of 
Title 31, Code of Federal Regulations).
    Liquid asset means cash or other property readily convertible into 
cash with little or no loss of value.
    Lump-sum credit means:
    (1) Under the Judges Plan, the Police Officers and Firefighters 
Plan, and the Teachers Plan, the unrefunded amount consisting of--
    (i) Retirement contributions from the basic salary of a participant;
    (ii) Amounts deposited covering earlier creditable service; and
    (iii) Such interest as authorized by statute to be included in the 
payment of refunds of retirement contributions; and
    (2) Under the Judges Plan, ``lump-sum credit for survivor annuity'' 
is defined in section 11-1561(10) of the D.C. Code.
    Offset means to withhold the amount of a debt, or a portion of that 
amount, from one or more payments due the debtor. Offset also means the 
amount withheld in this manner.
    Ordinary and necessary living expenses means such expenses as rent, 
mortgage payments, utilities, maintenance, food (including expenses for 
dining out), clothing, insurance (life, health, and accident), taxes, 
installment payments, medical expenses, reasonable expenses for 
recreation and vacations, expenses for support of a dependent when the 
debtor holds primary or joint legal responsibility for such support, and 
other miscellaneous expenses that the debtor can establish as being 
ordinary and necessary.
    Overpayment or overpayment debt means a payment of one or more 
Federal Benefit Payments to an individual in the absence of entitlement 
or in excess of the amount to which an individual is properly entitled.
    Participant means an individual who is or may become eligible to 
receive a benefit under the Police Officers and Firefighters Plan or 
Teachers Plan based on credit for service accrued as of June 30, 1997, 
or under the Judges Plan, or whose beneficiaries may be eligible to 
receive any such benefit.
    Refund means the payment of a lump-sum credit to an individual who 
meets all requirements for payment and files an application for it.
    Relinquish a valuable right means the individual has relinquished a 
valuable privilege, claim, entitlement, or benefit having monetary worth 
because of the overpayment or because of notice that such a payment 
would be made.
    Repayment schedule means the amount of each payment and the number 
of payments to be made to liquidate the debt as determined by the 
Department or the Benefits Administrator.
    Salary offset means any offset authorized by 5 U.S.C. 5514 and 31 
U.S.C. 3716.
    Substantially all, as used in Sec. 29.524, means that a debtor's 
income is less than or equal to his or her ordinary and necessary 
expenses plus a reasonable monthly allowance for unexpected or emergency 
expenses and does not allow for the deduction of a reasonable monthly 
installment payment to recover the debt.

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    Voluntary repayment agreement means an agreement wherein the debtor 
makes installment payments to repay an overpayment debt in accordance 
with a repayment schedule agreed to by the Benefits Administrator or the 
Department.
    Waiver means a decision not to recover all or part of an overpayment 
debt owed to the Retirement Funds under authority of sections 11021(3) 
or 11251(c)(2)(B) of the Act.



Sec. 29.503  Prohibition against collection of debts.

    (a) Debts may be collected from Federal Benefit Payments only to the 
extent expressly authorized by Federal debt collection statutes and any 
other applicable Federal law.
    (b) When collection of a debt from Federal Benefit Payments is 
authorized under paragraph (a) of this section, the collection will be 
made in accordance with this subpart and other applicable federal law.



Sec. 29.504  Status of debts.

    A payment of a Federal Benefit Payment to a debtor because of an 
error on the part of the Department or Benefits Administrator, or the 
failure of the creditor agency to properly and/or timely submit a debt 
claim, does not erase the debt or affect the validity of the claim by 
the creditor agency.



Sec. 29.505  Compromise of debts; termination and suspension of collection actions.

    The procedures for compromise of a claim for an overpayment or the 
termination or suspension of a collection action seeking to recover an 
overpayment, other than waiver of an overpayment under Secs. 29.521 
through 29.526, are controlled exclusively by the FCCS and 31 CFR part 
5.



Sec. 29.506  Recovery of other debts owed to the United States.

    (a) Procedures for Creditor Agencies. Agencies seeking to recover a 
debt by offset of Federal Benefit Payments payable to the debtor must 
comply with the offset procedures set forth in 31 U.S.C. 3716 and the 
FCCS. A creditor agency may seek to collect a debt through offset of 
Federal Benefit Payments pursuant to the Department's procedures for 
administrative offset set forth in 31 CFR part 5.
    (b) Offset by the Benefits Administrator. As required by 31 U.S.C. 
3716(c), the Benefits Administrator must compare payment records of the 
Retirement Funds with records of debts submitted to the Financial 
Management Service for collection by administrative offset, and must 
offset payments to satisfy, in whole or in part, debts owed by any 
annuitant.

                       Collection of Overpayments



Sec. 29.511  Demand letters.

    Except as provided in Sec. 29.516(e), before starting collection 
action to recover an overpayment, the Benefits Administrator must send a 
demand letter that informs the debtor in writing--
    (a) That an overpayment has occurred, the amount of the overpayment, 
and the facts giving rise to the overpayment;
    (b) The date by which payment of the debt should be made to avoid 
additional charges (i.e., interest, penalties and administrative costs) 
permitted by the FCCS and enforced collection;
    (c) The requirement that any overpayment debt delinquent for more 
than 180 days be transferred to the Department of the Treasury's 
Financial Management Service for collection;
    (d) The name, address, and phone number of the appropriate person or 
office the debtor may contact about the debt;
    (e) The remedies which may be used to enforce payment of the debt, 
including assessment of interest, administrative costs and penalties; 
administrative wage garnishment; the use of collection agencies; Federal 
salary offset; tax refund offset; administrative offset; and litigation.
    (f) Whether offset is available and, if so, the types of payment(s) 
to be offset or eligible for offset, the repayment schedule (if any), 
the right to request an adjustment in the repayment schedule, and the 
right to request a voluntary repayment agreement in lieu of offset;
    (g) An explanation of the Department's policy on interest, 
penalties, and administrative costs as set forth in

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31 CFR part 5, the FCCS, and 31 U.S.C. 3717, including a statement that 
such assessments must be made unless excused in accordance with the 
FCCS;
    (h) The debtor's opportunity to request repayment in installments if 
the debtor can show an inability to repay the debt in one lump sum;
    (i) The debtor's opportunity to inspect and/or receive a copy of the 
records relating to the overpayment;
    (j) The method and time period (60 calendar days) for requesting 
reconsideration, waiver, and/or compromise of the overpayment;
    (k) That all requests for waiver or compromise must be accompanied 
by a disclosure of the debtor's financial condition and ability to pay 
the debt;
    (l) The standards used by the Department in deciding requests for 
waiver (set forth in Secs. 29.521 through 29.526) and compromise (set 
forth in 31 CFR 902.2); and
    (m) The fact that a timely filing of a request for reconsideration, 
waiver and/or compromise, or a subsequent timely appeal of a 
reconsideration decision, will stop collection proceedings, unless--
    (1) Failure to take the offset would substantially prejudice the 
Federal Government's ability to collect the debt; and
    (2) The time before the payment is to be made does not reasonably 
permit the completion of these procedures.



Sec. 29.512  Reconsideration by the Benefits Administrator.

    (a) Right to reconsideration of overpayment determinations. 
Individuals who receive a demand letter and who wish to contest the 
existence or amount of the overpayment may ask the Benefits 
Administrator to reconsider the determination.
    (b) Requests for waiver or compromise. Individuals who wish to seek 
waiver or compromise of the overpayment may file such requests with the 
Department under Sec. 29.514. An individual may file a request for 
reconsideration in addition to a request for waiver or compromise.
    (c) Form and timing of requests for reconsideration. (1) A request 
for reconsideration must be in writing and must state the basis for the 
request. Individuals requesting reconsideration will be given a full 
opportunity to present any pertinent information and documentation 
supporting their position and should, to the extent possible, include 
such information and documentation in their request.
    (2) A request for reconsideration must be received by the Benefits 
Administrator within 60 calendar days of the date of the demand letter. 
The Department may extend the time limit for filing when the individual 
shows that he or she was not notified of the time limit and was not 
otherwise aware of it, or that he or she was prevented by circumstances 
beyond his or her control from making the request within the time limit, 
or for other good and sufficient reason.
    (3) When a request for reconsideration covered by this subpart is 
properly filed before the death of the debtor, it will be processed to 
completion unless the relief sought is nullified by the debtor's death.
    (d) Reconsideration decisions. (1) The Benefits Administrator's 
decision on a request for reconsideration will be based upon the 
individual's written submissions, evidence of record, and other 
pertinent available information.
    (2) A reconsideration decision by the Benefits Administrator must--
    (i) Be in writing;
    (ii) Provide notice of the extent of the individual's liability for 
the overpayment, if any;
    (iii) If the individual is determined to be liable for all or a 
portion of the overpayment, reaffirm or modify the conditions for the 
collection of the overpayment previously proposed in the demand letter;
    (iv) Provide notice of the right to appeal the Benefits 
Administrator's decision to the Department, the address to which such an 
appeal must be submitted, and the time limits applicable to such an 
appeal; and
    (v) State that a timely appeal of the Benefits Administrator's 
decision to the Department will suspend action to collect the debt.
    (e) Appeal of reconsideration decisions. The Department will review 
an appeal of a reconsideration decision under Sec. 29.513.

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Sec. 29.513  Appeals to the Department.

    (a) Form of appeal. An appeal of a reconsideration decision under 
Sec. 29.512 must be in writing and must state the basis for the appeal.
    (b) Time limits on appeals. (1) An appeal must be received by the 
Department within 60 calendar days from the date of the reconsideration 
decision.
    (2) The Department may extend the time limit for filing when the 
individual shows that he or she was not notified of the time limit and 
was not otherwise aware of it, or that he or she was prevented by 
circumstances beyond his or her control from making the request within 
the time limit, or for other good and sufficient reason.
    (c) Final decision. After consideration of the appeal, the 
Department will issue a final decision. The Department's decision will 
be in writing, will fully set forth the Department's findings and 
conclusions on the appeal, and will contain notice of the right to 
judicial review provided in Sec. 29.515. If the Department determines 
that the individual is liable for all or a portion of the overpayment, 
the decision also will contain the conditions for the collection of the 
overpayment. Copies of the final decision will be sent to the individual 
seeking appeal and to the Benefits Administrator.



Sec. 29.514  Requests for waiver and/or compromise.

    (a) Right to request waiver and/or compromise. Individuals who 
receive a demand letter regarding an overpayment may ask the Department 
to waive and/or compromise, in whole or part, the amount of the 
overpayment.
    (b) Requests for reconsideration. Individuals who have filed a 
request for reconsideration under Sec. 29.512 may also request a waiver 
and/or compromise under this section.
    (c) Form and timing of requests for waiver and/or compromise. (1) A 
request for waiver and/or compromise must be in writing and must state 
the basis for the request. Individuals making such requests will be 
given a full opportunity to present any pertinent information and 
documentation supporting their position and should, to the extent 
possible, include such information and documentation in their request. 
Individuals seeking waiver or compromise of an overpayment must also 
submit required financial information identified in the demand letter.
    (2) A request for waiver or compromise must be filed with the 
Department. If the request is sent by mail, it must be postmarked within 
60 calendar days of the date of the demand letter. If the request is 
hand delivered or delivered electronically, it must be received within 
60 calendar days of the date of the demand letter. The Department may 
extend the time limit for filing when the individual shows that he or 
she was not notified of the time limit and was not otherwise aware of 
it, or that he or she was prevented by circumstances beyond his or her 
control from making the request within the time limit, or for other good 
and sufficient reason.
    (3) When a request for waiver and/or compromise under this section 
is properly filed before the death of the debtor, it will be processed 
to completion unless the relief sought is nullified by the debtor's 
death.
    (d) Waiver and/or compromise decisions. (1) The Department's 
decision on a request for waiver and/or compromise will be based upon 
the individual's written submissions, evidence of record, and other 
pertinent available information. An individual's request for waiver will 
be evaluated by the standards set forth in Sec. 29.521 through 
Sec. 29.526. An individual's request for compromise will be evaluated by 
the standards set forth in the FCCS in 31 CFR part 902.
    (2) A waiver or compromise decision by the Department will--
    (i) Be in writing;
    (ii) Provide notice of whether the overpayment will be waived or 
compromised, and the extent to which the individual is still liable for 
the overpayment, if at all;
    (iii) If the individual is determined to be liable for all or a 
portion of the overpayment, reaffirm or modify the conditions for the 
collection of the overpayment previously proposed in the demand letter; 
and
    (iv) Be issued within 120 calendar days from the Department's 
receipt of a timely request for waiver and/or compromise. This time 
limit does not apply

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to requests for compromise that are referred to the Department of 
Justice for consideration pursuant to 31 CFR 902.1(b).



Sec. 29.515  Judicial review.

    An individual whose request for reconsideration has been denied (in 
whole or part) in a final decision by the Department under Sec. 29.513 
may, within 180 days of the date of the final decision, file a civil 
action in the United States District Court for the District of Columbia. 
Any such civil action must be filed in accordance with the rules of that 
court.



Sec. 29.516  Collection of overpayments.

    (a) Means of collection. Collection of an overpayment may be made by 
means of offset under Sec. 29.517, or under any statutory provision 
providing for offset of money due the debtor from the Federal Government 
including, but not limited to, Federal Benefit Payments. Collection may 
also be effected by referral to the Justice Department for litigation, 
as provided in Sec. 29.520, or referral to a collection agency as 
provided in Sec. 29.519, or by other means authorized by federal law.
    (b) Additional charges. Interest, penalties, and administrative 
costs will be assessed on the overpayment in accordance with standards 
established in 31 U.S.C. 3717 and 31 CFR 901.9. Additional charges will 
be waived when required by the FCCS. The Department will waive the 
collection of interest on the overpayment pending the Benefits 
Administrator's consideration of a request for reconsideration and the 
Department's consideration of a request for waiver and/or compromise or 
the appeal of a reconsideration decision. In addition, such charges may 
be waived when the Department determines--
    (1) Collection of those charges would be against equity and good 
conscience under the standards prescribed in Secs. 29.523 through 
29.525; or
    (2) Waiver of those charges would be in the best interest of the 
United States.
    (c) Collection in installments. (1) Whenever feasible, overpayments 
will be collected in one lump sum.
    (2) However, installment payments may be effected when--
    (i) The debtor establishes that he or she is financially unable to 
pay in one lump sum; or
    (ii)(A) The benefit payable is insufficient to make collection in 
one lump sum;
    (B) The debtor fails to respond to a demand for full payment; and
    (C) Offset is available.
    (d) Offset Amount. (1) The amount offset from a monthly Federal 
Benefit Payment will be the lesser of:
    (i) The amount of the debt, including any interest, penalties and 
administrative costs;
    (ii) An amount equal to 15 percent of the monthly Federal Benefit 
Payment; or
    (iii) The amount, if any, by which the monthly Federal Benefit 
Payment exceeds $750.
    (2) For purposes of this subsection, the ``monthly Federal Benefit 
Payment'' is the amount of the gross monthly benefit after any 
reductions or deductions required under law, including reductions made 
to recover overpayments of Federal Benefit Payments.
    (e) Commencement of collection. (1) Except as provided in paragraph 
(e)(2) of this section, collection will begin after the time limits for 
requesting further rights stated in Sec. 29.512 through Sec. 29.514 
expire and no such requests have been made, or after the Benefits 
Administrator and/or the Department have issued decisions on all timely 
requests for or appeals of those rights, unless failure to make an 
offset would substantially prejudice the Department's ability to collect 
the overpayment and the time before the payment is to be made does not 
reasonably permit the completion of the proceedings in Sec. 29.511 
through Sec. 29.514 or litigation. When offset begins without completion 
of the administrative review process, these procedures will be completed 
promptly, and amounts recovered by offset but later found not owed will 
be refunded promptly.
    (2) The procedures identified in Sec. 29.511 through Sec. 29.514 
will not be applied when the overpayment is caused by--

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    (i) A retroactive adjustment in the periodic rate of annuity or any 
deduction taken from annuity when the adjustment is a result of the 
annuitant's election of different entitlements under law, if the 
adjustment is made within 120 days of the effective date of the 
election; or
    (ii) interim estimated payments made before the formal determination 
of entitlement to annuity, if the amount is recouped from the total 
annuity payable on the first day of the month following the later of--
    (A) The last interim payment or
    (B) The date the formal determination is made.
    (f) Collection of delinquent debts. (1) Debts delinquent over 180 
days. The Benefits Administrator must refer all overpayment debts that 
are over 180 days delinquent to the Secretary for collection pursuant to 
31 U.S.C. 3711(g) and 3716, and 31 CFR part 901.
    (2) Debts delinquent less than 180 days. Once an overpayment debt 
becomes delinquent, the Benefits Administrator should refer it to the 
Secretary for collection by centralized administrative offset pursuant 
to 31 CFR 901.3, unless collection of the debt by some other means is 
likely to occur in a more timely and efficient manner.
    (3) Once a debt is referred under this subsection, the Benefits 
Administrator has no further obligation to collect the debt.



Sec. 29.517  Collection by offset.

    (a) Offset from retirement payments. An overpayment may be collected 
in whole or in part from any refund payment or recurring Federal Benefit 
Payments.
    (b) Offset from other payments--(1) Administrative offset. When 
offset under subsection (a) is not available, an overpayment may be 
offset from other Federal payments due the debtor from other agencies 
under the procedures set forth in 31 CFR part 5 and 31 CFR 901.3(c).
    (2) Salary offset. When the debtor is an employee of the Federal 
Government, the Department may effect collection of an overpayment by 
offset of the debtor's pay in accordance with regulations published to 
implement such offsets under 5 U.S.C. 5514 (see 5 CFR part 550, subpart 
K; 31 CFR 285.7; and 31 CFR Part 5). Due process described in the 
federal salary offset regulations of 31 CFR part 5 will apply. When the 
debtor did not receive a hearing under those regulations and requests 
such a hearing, one will be conducted in accordance with 5 CFR part 550, 
subpart K and 31 CFR part 5.
    (3) Tax refund offset. The Department may effect collection of an 
overpayment by offset of the debtor's tax refund in accordance with the 
Department's tax refund offset regulations found at 31 CFR part 5.



Sec. 29.518  Reporting delinquent debts to credit bureaus.

    (a) Notice. If a debtor's response to the demand letter does not 
result in payment in full, payment by offset, or payment in accordance 
with a voluntary repayment agreement or other repayment schedule 
acceptable to the Benefits Administrator, and the debtor's rights under 
Sec. 29.512 through Sec. 29.514 have been exhausted, the Benefits 
Administrator must report the debtor to a credit bureau. In addition, a 
debtor's failure to make subsequent payments in accordance with a 
repayment schedule must result in a report to a credit bureau. Before 
making a report to a credit bureau, the Benefits Administrator must 
notify the debtor in writing that--
    (1) The payment is overdue;
    (2) The Benefits Administrator intends, after 60 days, to make a 
report as described in paragraph (b) of this section to a credit bureau;
    (3) The debtor's right to dispute the liability has been exhausted 
under Sec. 29.512 through Sec. 29.514; and
    (4) The debtor may avoid having the Benefits Administrator report 
the debtor to a credit bureau by paying the debt in one lump sum or 
making payments current under a repayment schedule.
    (b) Report. If, after being sent the notice described in paragraph 
(a) of this section, the debtor does not pay the overpayment debt or 
make payments current under a repayment schedule or fails to respond to 
the notice, and 60 days have elapsed since the notice was mailed, the 
Benefits Administrator will report to a credit bureau that the

[[Page 314]]

debtor is responsible for an unpaid debt and provide the following 
information:
    (1) The debtor's name, address, taxpayer identification number, and 
any other information necessary to establish the identity of the 
individual;
    (2) The amount, status, and history of the debt; and
    (3) The fact that the debt arose in connection with the 
administration of Federal Benefit Payments under a District Retirement 
Fund.
    (c) Subsequent reports. The Benefits Administrator must update its 
report to the credit bureau whenever it has knowledge of events that 
substantially change the status or the amount of the liability.
    (d) Other reporting of delinquent debts. Pursuant to 31 CFR 901.4, 
delinquent overpayment debts should be reported to the Department of 
Housing and Urban Development's Credit Alert Interactive Voice Response 
System (CAIVRS).
    (e) Privacy Act considerations. A delinquent debt may not be 
reported under this section unless a notice issued pursuant to the 
Privacy Act, 5 U.S.C. 552a(e)(4), authorizes the disclosure of 
information about the debtor to a credit bureau or CAIVRS.



Sec. 29.519  Referral to a collection agency.

    (a) The Department retains the responsibility for resolving 
disputes, compromising debts, referring overpayment debts for 
litigation, and suspending or terminating collection action.
    (b) The Department may not refer overpayment debts to commercial 
collection agencies until all procedures required by or requested under 
Sec. 29.511 through Sec. 29.514 have been completed.



Sec. 29.520  Referral for litigation.

    The Department may refer to the Justice Department for litigation 
overpayment debts which cannot be compromised or waived, or on which 
collection activity cannot be suspended or terminated, and which the 
Department has been unable to recover pursuant to the collection 
activity described in Sec. 29.511 through Sec. 29.519. (See 31 CFR part 
904.) Such debts should be referred to the Justice Department as early 
as possible, but at least within 1 year of the date such debts last 
became delinquent. In the case of overpayments arising from fraud, 
misrepresentation, or the presentation of a false claim, referral should 
be made to the Justice Department immediately. (See 31 CFR 900.3(a).) 
Referral of a debt to the Justice Department will suspend processing 
under Sec. 29.511 through Sec. 29.519 of this subpart.

                  Standards for Waiver of Overpayments



Sec. 29.521  Conditions for waiver and other adjustments.

    (a) General. Overpayments made from the Retirement Funds will be 
recovered unless there is substantial evidence that the individual from 
whom recovery is to be made is eligible for waiver.
    (b) Waiver. The Department may waive an overpayment from the 
Retirement Funds (provided there is no indication of fraud, 
misrepresentation, or lack of good faith on the part of the debtor) 
under sections 11021(3) or 11251(c)(2)(B) of the Act when it is 
established by substantial evidence that the individual from whom 
recovery is to be made--
    (1) Is not at fault in causing or contributing to the overpayment, 
and
    (2) Recovery would be against equity and good conscience.
    (c) Adjustment in the installment schedule. (1)(i) An overpayment 
will not be waived because of financial hardship if a reasonable 
installment schedule can be established for repayment of the debt by 
adjusting the installment schedule originally established.
    (ii) For example, if the Department finds that the original 
installment schedule--24 installments at $125 each--causes the debtor 
financial hardship, but that repayment in 60 installments at $50 each 
does not, it may adjust the installments and recover the debt in full.
    (2) Where it has been determined that an individual is ineligible 
for a waiver, but the individual has shown that collection action 
pursuant to the original installment schedule would cause him or her 
financial hardship, the Department may--

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    (i) Adjust the installment schedule if the individual shows that it 
would cause him or her financial hardship to make payments at the rate 
initially scheduled by the Department; or
    (ii) Terminate the collection action under 31 CFR 903.3 if the costs 
of collecting the debt are anticipated to exceed the amount recoverable.



Sec. 29.522  Fault.

    (a) General rule. A debtor is considered to be at fault if he or 
she, or any other person having an interest in obtaining a waiver of the 
claim, caused or contributed to the accrual of the overpayment. The 
Department considers a debtor or any other person having an interest in 
obtaining a waiver of the claim to have caused or contributed to the 
accrual of an overpayment if--
    (1) Payment resulted from the individual's incorrect but not 
fraudulent statement, which the individual knew or should have known to 
be incorrect; or
    (2) Payment resulted from the individual's failure to disclose facts 
in his or her possession which the individual knew or should have known 
were material, when the Department has identified that the individual 
has a duty to report and has clearly notified the individual of this 
reporting requirement.
    (3) The following factors may affect the decision as to whether the 
debtor is or is not at fault where the debtor submitted an incorrect 
statement, or the debtor failed to disclose material facts in his or her 
possession--
    (i) The debtor's age;
    (ii) The debtor's physical and/or mental condition; and
    (iii) The availability and nature of the information provided to the 
debtor by the Department.
    (b) Knowledge of an overpayment. (1) Individuals who are aware that 
they are not entitled to a payment or are aware that a payment is higher 
than the payment to which they are entitled are not considered to have 
contributed to the overpayment if they promptly contact the Benefits 
Administrator and question the correctness of the payment and take no 
further action in reliance of the overpayment.
    (2) Any contact made with the Benefits Administrator concerning the 
overpayment within 60 days of receipt (if the overpayment is a recurring 
payment, contact must be made within 60 days of the initial payment) 
will satisfy the prompt notification requirement.
    (c) Reasonable person standard. The Department will use a reasonable 
person standard to determine whether an individual should have known 
that a statement was incorrect or that material facts in the 
individual's possession should have been disclosed. The reasonable 
person standard will take into account the objective factors set forth 
is paragraph (a)(3) of this section.



Sec. 29.523  Equity and good conscience.

    Recovery is against equity and good conscience when there is 
substantial evidence that--
    (a) It would cause financial hardship to the person from whom it is 
sought no matter what the amount and length of the proposed installment;
    (b) The recipient of the overpayment can show (regardless of his or 
her financial circumstances) that due to the notice that such payment 
would be made or because of the incorrect payment he or she either has 
relinquished a valuable right or has changed positions for the worse; or
    (c) Recovery would be unconscionable under the circumstances.



Sec. 29.524  Financial hardship.

    Financial hardship may be deemed to exist when the debtor needs 
substantially all of his or her current and anticipated income and 
liquid assets to meet current and anticipated ordinary and necessary 
living expenses during the projected period of collection. Financial 
hardship will not be found to exist when the debtor merely establishes 
that the repayment causes a financial burden, i.e., when it is 
inconvenient to repay the debt. If there are anticipated changes in 
income or expenses that would allow for the recovery of the overpayment 
at a later date, the Department may suspend collection action until a 
future date.
    (a) Considerations. Pertinent considerations in determining whether 
recovery would cause financial hardship include the following:

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    (1) The debtor's financial ability to pay at the time collection is 
scheduled to be made, and
    (2) Income to other family member(s), if such member's ordinary and 
necessary living expenses are included in expenses reported by the 
debtor.



Sec. 29.525  Ordinary and necessary living expenses.

    An individual's ordinary and necessary living expenses include rent, 
mortgage payments, utilities, maintenance, transportation, food, 
clothing, insurance (life, health, and accident), taxes, installment 
payments for which the individual is already liable, medical expenses, 
support expenses for which the individual is legally responsible, and 
other miscellaneous expenses that the individual can establish as being 
ordinary and necessary.



Sec. 29.526  Waiver precluded.

    Waivers will not be offered or granted when--
    (1) The overpayment was obtained by fraud, misrepresentation, or by 
improper negotiation of checks or withdrawal of electronic fund transfer 
payments after the death of the payee; or
    (2) The overpayment was made to an estate and a timely demand for 
repayment is made prior to the final disbursement by the administrator 
or executor of the estate.

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          Subtitle B--Regulations Relating to Money and Finance

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