Collecting Debt from Federal Employees

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By on May 5, 2011 in Current Events with 0 Comments

The Office of Personnel Management has put forth a proposal that would eliminate the 10-year statue of limitations with respect to garnishing pay from federal employees who owe the government money. The proposal further states that any money deducted from employees’ pay checks involuntarily may not exceed 15 percent of the total amount of the check unless a court rules that more should be taken from the employees as part of a suit against the debtor.

The relevant portions of the proposal state:

…to eliminate the 10-year statute of limitations on collection of debt by administrative offset, which includes centralized salary offset. The proposed regulations conform with an amendment to 31 U.S.C. 3716(e) made by section 14219 of the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-246 (122 Stat. 1651) that became effective on June 18, 2008. This change authorizes the offset of nontax payments (via salary offset) to collect delinquent Federal debt without regard to the amount of time the debt has been delinquent.

The Department of the Treasury has updated its regulations to reflect this change (see 74 FR 68537, December 28, 2009). To avoid any undue hardship, the Secretary of the Treasury has added a requirement applicable to debts that were previously ineligible for collection by offset because they have been outstanding for more than 10 years. For these debts, creditor agencies must certify to the Secretary of the Treasury that the notice of intent to offset was sent to the debtor after the debt became 10 years delinquent. This is intended to alert the debtor that his or her debt may now be collected by offset and allows the debtor additional opportunities to dispute the debt, enter into a repayment agreement, or otherwise avoid offset.

Also, OPM is proposing to revise regulations at 5 CFR 550.1104 to clarify that the amount deducted for any involuntary installment deductions may exceed 15 percent of the disposable pay only when a greater deduction has been ordered by a court of the United States in an action or suit brought against the debtor. This is to conform with section 124 of Public Law 97-276, October 2, 1982 (96 Stat. 1195) which allows an agency to deduct an amount greater than 15 percent of disposable pay, as determined by a court of the United States.

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