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- A
participant who breaches the FLRP contract
by failing to begin or complete the
required FLRP service will be placed
in default and obligated to pay the
United States an amount equal to the
sum of the following:
- The
total amounts paid by the HHS Secretary
to, or on behalf of, the participant
for loan repayments for any period
of obligated service not served;
and
- An
amount equal to the number of months
of obligated service not completed
by the participant multiplied by
$1,000.
Any amounts the United States is
entitled to recover, as set forth
above, must be paid within 30 days
from the date the HHS Secretary’s
first demand letter is mailed.
If these amounts are not repaid
by the due date, interest and other
delinquent charges will be assessed
as provided by 45 C.F.R. § 30.18.
- Failure
to pay the FLRP debt by the due date
also has the following consequences:
- The
debt will be reported to credit
report agencies. If the debt
becomes past due, it will be reported
as “delinquent.”
-
The debt will be referred to a debt
collection agency and the Department
of Justice. Any FLRP debt past
due for 45 days will be referred
to a debt collection agency. If
the debt collection agency is unsuccessful
in receiving payment in full, the
debt will be referred to the Department
of Justice for enforced collection.
- Administrative
offset. Federal and/or State
payments due to the participant
(e.g., an IRS income tax refund)
may be offset by the Department
of Treasury to repay a delinquent
FLRP debt. Also, recovery through
Administrative Wage Garnishment
may be enforced to repay a delinquent
FLRP debt.
- Bankruptcy.
A financial obligation under the
FLRP may only be discharged in bankruptcy
if the discharge is granted more
than seven years after the due date
and only if a bankruptcy court determines
that the non-discharge of the debt
would be unconscionable.
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