(a) Whenever feasible, and except as otherwise provided by law,
debts owed to the United States, together with interest, penalties, and
administrative costs should be collected in full in one lump sum. This
is true whether the debt is being collected by administrative offset or
by another method, including voluntary payment. However, if the debtor
is financially unable to pay the indebtedness in one lump sum, payment
may be accepted in regular installments. Agencies should obtain and may
require financial statements from debtors who represent that they are
unable to pay the debt in one lump sum. Agencies which agree to accept
payment in regular installments should obtain a legally enforceable
written agreement from the debtor which specifies all of the terms of
the arrangement and which contains a provision accelerating the debt in
the event the debtor defaults. The size and frequency of installment
payments should bear a reasonable relation to the size of the debt and
the debtor's ability to pay. If possible, the installment payments
should be sufficient in size and frequency to liquidate the Government's
claim in not more than 3 years. Installment payment of less than $50 per
month should be accepted only if justifiable on the grounds of financial
hardship or for some other reasonable cause. An agency holding an
unsecured claim for administrative collection should attempt to obtain
an executed confess-judgment note, comparable to the Department of
Justice Form USA-70a, from a debtor when the total amount of the
deferred installments will exceed $750. Such notes may be sought when an
unsecured obligation of a lesser amount is involved. When attempting to
obtain confess-judgment notes, agencies should provide their debtors
with written explanation of the consequences of signing the note, and
should maintain documentation sufficient to demonstrate that the debtor
has signed the note knowingly and voluntarily. Security for deferred
payments other than a confess-judgment note may be accepted in
appropriate cases. An agency may accept installment payments
notwithstanding the refusal of a debtor to execute a confess-judgment
note or to give other security, at the agency's option.
(b) If the debtor owes more than one debt and designates how a
voluntary installment payment is to be applied as among those debts,
that designation must be followed. If the debtor does not designate the
application of the payment, agencies should apply payments to the
various debts in accordance with the best interests of the United
States, as determined by the facts and circumstances of the particular
case, paying special attention to applicable statutes of limitations.
