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April 24, 2001
To: Lenders/Holders/Servicers
Participating in the Health Education Assistance Loan (HEAL) Program
Subject: Clarification
of HEAL Litigation Filing Procedures and Time Frames
Lender Policy Memorandum L-2001-6
We have been asked
to clarify and update the procedures and timing for commencing litigation
against a delinquent HEAL borrower. The lender is required to adhere
to the following steps and time frames to be in compliance with HEAL policy
and avoid penalty for “excessive” filing times.
By Day 150 Delinquent
– HEAL’s third pre-claims assistance letter is mailed to a delinquent
HEAL borrower. Lender can continue to attempt to collect the account.
By Day 180 Delinquent
– The “Official” litigation filed date. Sometime between 150 to 180 day's
delinquent is the litigation filed date that must be reported to HEAL
on the monthly litigation tape. A Lender can continue to attempt to
collect the account and has until day 210 to send litigation package/documents
to the litigation vendor/attorney.
By Day 210 Delinquent
– Vendor/attorney sends a collection notice to the borrower—not able to
collect for 30 days until day 240.
By Day 240 Delinquent
– Vendor/attorney attempts to collect the account and prepares case for
court.
By Day 270 Delinquent
– Lawsuit must be filed by day 270.
An action may take
place before the end of any of the time periods without affecting the
timing of subsequent actions. For example, if an account is sent to a
vendor/attorney on day 200 rather than day 210, the vendor/attorney still
has until day 240 before attempting to collect the account. If, however,
an action is not performed within a particular time frame, a penalty will
be assessed even if the total elapsed time is less than or equal to the
total number of days allowed for the entire litigation process. For example,
if the vendor/attorney is not sent the account until day 230, but the
remainder of the litigation process is accelerated so that the lawsuit
is filed on day 265, the penalty would nevertheless be the 20 days that
the account was late going to the vendor/attorney.
Failure to follow
these time frames will result in, at the very least, an interest penalty.
The penalty will be calculated by determining the number of days beyond
the maximum allowable number of days for each step of the process and
multiplying by the daily interest accrual.
If you have any questions
regarding this policy memorandum, please contact Ms. Christine Parks of
the HEAL Program at (301) 443-1540.
Stephen J. Boehlert
Associate Division Director, HEAL
Division of Student Assistance
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