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HUD Debt Referral to the DOJ for Litigation

Video Transcript

 

The transcript of the video follows below for further review.

REFERRAL FOR LITIGATION.   

Policy.  HUD may refer a delinquent debt to the US Department of Justice (DOJ) for legal action to obtain a judgment and/or collections from debtors.  Appropriate reasons for DOJ referral include:  to place a lien against assets owned by the debtor, to garnish income of the debtor that cannot be accomplished via AWG or TOP, to resolve a debt dispute, to renew a state-level judgment, and to force a debtor to disclose income and assets.  For debts that have been referred to Cross-Servicing, the Department of Treasury (DOT) will initiate the referral to DOJ for litigation, when appropriate.

 

Generally, DOJ requires that debts must be $2,500 or greater (not including interest, penalties, and administrative costs).  DOJ requests that agencies make every effort to refer debts within one year of claim payment or delinquency.  Only in exceptional cases should debts be referred to DOJ when less than one year remains on the applicable statute of limitations for litigation. In addition, information about the debt should show:  that litigation will likely result in full or partial recovery of the amount owed, the current address of the debtor is known, there are no valid defenses available to the debtor, collection via offset is not likely, and the probable recovery will exceed the estimated costs of litigation.  Exceptions to these rules may be sought from DOJ.

Pre-Referral Requirements.  HUD must seek voluntary payment before referring a debt for litigation.  At a minimum, a demand letter must be sent and a sufficient effort made to effect a compromise settlement.

Post-Referral Activities.   Once a debt is referred to DOJ, all HUD collection activity should cease.  To prevent inappropriate automated collection action, the case must be updated in DCAMS.  Only DOJ has the authority to compromise the debt, enter into payment agreements, or terminate collection activity.  Any inquiries on the debt should be directed to the appropriate office of DOJ.  Any changes related to case status information (e.g. bankruptcy filing) or new information obtained regarding the debt or debtor (e.g. discovery of fraud, misrepresentation, etc.) must be promptly reported to DOJ.  If a payment is received at HUD, disposition of the payment should be coordinated with DOJ.

 

 

 

 

 

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