TERMINATION OF
THE LOAN
REPAYMENT AGREEMENT
1. If an applicant who has entered
into a written contract with the Secretary and who--
a. is enrolled in the final year
of a course of study and who--
fails to maintain an
acceptable level of academic standing in the
educational institution in which the
applicant is enrolled,
voluntarily terminates
such enrollment,
is dismissed from such
educational institution before completion of
such course of study, or
is enrolled in a graduate
training program, fails to complete such
training program, and does not receive a
waiver from the Secretary under Section
108(b)(1)(B)(ii);
shall be liable, in lieu of any
service obligation arising under such contract, to
the United States for the amount which has been paid
on such individual's behalf under the contract.
2. If for any reason not specified in
paragraph (1), an applicant breaches his or her written
contract by failing either to begin, or complete, the
applicant's period of obligated service in accordance
with Section 108(f), the U.S. shall be entitled to
recover from the applicant an amount to be determined in
accordance with the following formula:
A = 3Z[(t-s)/t]
in which--
a. "A"
is the amount the U.S. is entitled to recover;
b. "Z"
is the sum of the amounts paid under this Section to,
or on behalf of, the applicant and the interest on
such amounts which would be payable if, at the time
the amounts were paid, they were bearing interest at
the maximum legal prevailing rae, as determined by
the Treasurer of the U.S.;
c. "t"
is the total number of months in the applicant's
period of obligated service in accordance with
Section 108(f); and
d. "s"
is the number of months of such period served by such
applicant in accordance with this section.
The above text concerning damages for
breach of the LRP contract is taken directly from Section
108(1) of the IHCIA.
Termination by the
Government/tribal/urban Indian/Buy Indian health program
of a participant's employment during his or her period of
contracted service because of the participant's
unsatisfactory performance shall be considered a breach
of LRP Contract. The above cited default provisions will
apply to all LRP participants.
Damages Payable in One Year:
Any amount of damages which the U.S. is
entitled to recover under Section 108(1) shall be paid to
the U.S. within the 1-year period beginning on the date
of the breach or such longer period beginning on such
date shall be specified by the Secretary. Damages not
paid within the prescribed 1-year period will result in
interest and late penalties being charged in addition to
the damages.
Effects of Delinquency in Paying
Damages:
If the damages owed are not paid within
three months after the 1-year payment period, the PSC/DFS
Debt Management Branch, will use collection agencies
under contract with the Administrator of the General
Services Administration or contract directly with
collection agencies selected by the PSC. Delinquencies of
more than 60 days or damages of more than $100 may be
disclosed to appropriate credit reporting agencies.
Waiver, Cancellation or Discharge
of a Particpant's Obligation:
Any obligation of an individual under the
LRP for service or payment of damages shall be canceled
upon the death of the individual.
The Secretary shall by regulation provide
for the partial or total waiver or suspension of any
obligation of service or payment by an individual under
the LRP whenever compliance by the individual is
impossible or would involve extreme hardship to
individual and if enforcement of such obligation with
respect to any individual would be unconscionable.
The Secretary may waive, in whole or in
part, the rights of the U.S. to recover amounts under
this section in any case of extreme hardship or other
good cause shown, as determined by the Secretary.
Any obligation of an individual under the
LRP for payment of damages may be released by a discharge
in bankruptcy under Title 11 of the U.S. Code only if
such discharge is granted after the expiration of the
5-year period beginning on the first date of that payment
of such damages is required, and only if the bankruptcy
court finds that non-discharge of the obligation would be
unconscionable.
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