[Congressional Record Volume 141, Number 143 (Thursday, September 14, 1995)]
[Senate]
[Page S13624]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         ADDITIONAL STATEMENTS

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              THE DEBT COLLECTION IMPROVEMENT ACT OF 1995

 Mr. HARKIN. Mr. President, on Tuesday, I introduced the Debt 
Collection Improvement Act of 1995, S. 1234, that would reduce the 
Government's budget deficit by billions of dollars by clamping down on 
the huge amount of unpaid debts to the Federal Government.
  The Government makes thousands of loans and guarantees thousands 
more. Most citizens, businesses, and organizations pay those loans 
back. Some fall on difficult times and simply cannot pay. Some could 
pay, but they do not do so for one reason or another. This is 
unacceptable. We must act to increase the Government's efforts at 
collecting bad debts so that law-abiding taxpayers do not have to bear 
this burden.
  The United States has $67 billion in delinquent taxes and $49 billion 
in other types of delinquent receivables, most from loans and 
guaranteed loans. And, nontax debts have grown by nearly a quarter, $9 
billion, over the last 5 years. Generally, those in the debt collection 
field assume that 90 percent pay in a timely manner. Seven percent pay 
late. And 3 percent become seriously delinquent. This amendment does 
not impact a person who is up to 90 days late in making payments. It is 
aimed at the seriously delinquent.
  We must become more systematic, diligent, and aggressive in seeking 
payment. Clearly, the worst way to solve an unpaid debt is to not push 
for repayment of outstanding funds. Yet, the Federal Government is not 
nearly aggressive enough in going after unpaid debts.
  In conjunction with the administration, Congressman Horn of 
California and Congresswoman Maloney of New York introduced similar 
legislation last month. I want to thank Congresswoman Maloney for all 
her help in working with me on this important measure. She has years of 
leadership on improving Government collection of outstanding debts and 
has conducted a significant study of the levels of delinquent debt 
earlier this year. My proposal is based on their measure, but I have 
made a number of modifications to enhance the Government's ability to 
recover outstanding payments. For example, this measure clarifies the 
Federal Government would collect debts owed to States where there was a 
Federal financial interest and it would help to collect delinquent 
court-ordered child support payments. Failure to pay child support 
often results in the custodial parent and the children unnecessarily 
falling into the welfare system.
  What does this bill require? The Department of the Treasury would act 
as a central collection agency for nontax debts as well as performing 
their current role regarding tax related debts. Other agencies would 
refer debts over 90 days in arrears, with a few exceptions, to the 
Treasury Department. Exceptions include cases where an agency is 
already in litigation for foreclosure on property, where the case has 
been recently turned over to a private collection agency within 90 days 
or when the loan is scheduled to be sold within 90 days. There is also 
an exception for specific loans or loan guarantees that may be 
collected after the 90-day period under terms set out in specific 
statutory authority. The original agency could continue its own efforts 
to collect the delinquent debts.
  The Treasury could collect unpaid obligations by offsetting Federal 
payments going to the person or entity. In the case of government 
salary or other non-means tested income checks, up to 15 percent could 
be garnished. Veterans payments would be exempt and the Secretary of 
the Treasury would be able to grant additional, but very limited, 
exceptions. The Treasury would also pursue a wide variety of 
traditional efforts to collect debts:
  Private attorneys and debt collection agencies could be hired to 
locate hidden assets;
  In order to avoid cumbersome legal statutes, the Federal Government 
could use administrative rather than judicial foreclosure procedures, 
as private creditors can now do, to foreclose on property;
  Persons in default would not be able to receive new loans or loan 
guarantees from the Federal Government with some exceptions; and,
  Payments on Federal debts would be reported to credit bureaus so 
those who pay and those who do not will get the credit rating that they 
deserve. Where a debt could not be collected, the Treasury would notify 
the Internal Revenue Service. Under current law, a bad debt which is 
written off is considered to be taxable income to the borrower. 
Hopefully these provisions will be added incentive to not put the 
Federal Government to end of the list when payment checks are being 
made out.
  This proposal provides appropriate notice and preserves everyone's 
due process rights. It simply says, if you owe, you should pay. 
Taxpayers shouldn't be left carrying the load of those who choose not 
to honor their obligations.
  As we move to balance the budget, it would be unfair to increase 
Medicare costs or cut college loans while not doing what we can to 
collect over $100 billion in unpaid debts.
  I urge my colleagues to review this proposal. I think they will see 
it is a commonsense plan worthy of their support.


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