Bill Collection

Due to the marked increase of delinquent debts owed to the United States government by various individuals or organizations, the Congress passed the Debt Collection Improvement Act of 1996 (DCIA). This law centralized the collection of delinquent debts and provided new responsibilities to the U.S. Department of Treasury regarding the matter. Delinquent debts are the debts not paid on the due date or by the end of the “grace period” as postulated in the loan or repayment agreement. It may also mean to the debts not paid in the due date stated in the initial billing notice. Debt’s due date is often 30 days after the agency mailed the notice. Date of delinquency pertains to the date the agency mailed or delivered the billing notice.

Here is an example of delinquent debts. A borrower owed U.S. government $12,000 due on April 10. There is a grace period of 15 days as postulated in the loan agreement. This means that the lending agency will not fine the borrower for lateness or declare the loan delinquent if he/she is able to make the necessary payments on April 25 or before April 25. If the borrower makes his payment before April 25, then the loan is not delinquent. But if the borrower is not able to provide the payment for the money owed by April 25, the loan is then considered delinquent and the date of delinquency is April 10.

Now, this is where the Debt Collection Improvement Act comes in. It is stated in this particular law the actions that must be undertaken by the agencies involved in the collection of public debts. The Financial Management Service of the U.S. Department of Treasury, alongside the Office of Management and Budget (OBM) are responsible for the implementation of the debt collection provision. The other tasks of FMS include giving assistance in collecting of delinquent debts in the Internal Revenue Service; collecting of debts by means of salaries offset; utilization of governmentwide contract available to federal agencies to transfer delinquent debts to the private collection agencies.

The usual steps undertaken by the Financial Management Service in the collection of delinquent debts are: (1) the seeking of voluntary repayment, (2) initiating involuntary collection action and taking of necessary actions on uncollectible debt. The debts that the Financial Management Service collects are unpaid loans, misused grant funds, overpayments or duplicate payments through the federal salary or benefit payment recipients,  and fines, penalties or fees as referred by federal agencies.