Unresolved Issues Impede Federal Debt Collection Efforts--A Status Report

Gao ID: CD-80-1 January 15, 1980

The amount of money owed the Federal Government is enormous and growing. Both the legislative and executive branches are taking steps to strengthen debt collection programs, but a number of unresolved legal and institutional issues have slowed these efforts.

There are two basic reasons why debt collection has not kept pace with the number of debts receivable. Many agencies have not been agressive in pursuing collection, and some appear not to devote enough resources. Present collection methods are expensive, slow, and ineffective when compared with commercial practices. Furthermore, there are questions regarding the priority that should be placed on debt collection over conflicting demands for resources, concerns for personal privacy, and humanitarian and other considerations. In general, information available on delinquent debts was not adequate to meet the needs of Congress or agency management. Resources are not being used to the fullest degree possible. Reporting debtors to private credit agencies would help deter payment delinquency but such reporting has been slow. Progress toward charging interest on delinquent debts has also been slow. Collecting debts by offset has been constrained by legal and institutional issues. Another way to improve debt collection would be to speed up litigation by allowing agencies to refer debts directly to U.S. attorneys for collection rather than through GAO. GAO and the Department of Justice are also considering the potential for increased use of agencies to litigate their total own debts, thereby reducing the growing backlog of cases referred to U.S. attorneys. The present restrictions on obtaining addresses of debtors from the Internal Revenue Service should be removed. Government use of private collection agencies also appears to offer potential, especially for agency management.

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