Impediments Faced in Litigating and Collecting Debts Owed the Government
GGD-87-7BR: Published: Oct 15, 1986. Publicly Released: Oct 15, 1986.
In response to a congressional request, GAO reviewed the Department of Justice's procedures and litigation efforts in collecting delinquent debts referred by other federal agencies.
GAO found that: (1) as of September 30, 1985, Justice had about 96,750 outstanding debt cases valued at $6.5 billion; and (2) the Departments of Education, Agriculture, and Housing and Urban Development, and the Veterans and Small Business Administrations accounted for the majority of the outstanding debt cases. GAO also found that Justice experiences difficulty in litigating and enforcing debt collection because: (1) the nature of some debts, such as bankruptcy, makes debt collection impossible; (2) agencies untimely submit their debt referral packages, which often lack necessary information; (3) U.S. marshals are not available to serve the legal documents; (4) state laws present obstacles to enforcing collections; (5) federal bankruptcy laws delay the recovery of money owed the government; (6) it has an inadequate staff; (7) recordkeeping on the status and disposition of cases is poor; and (8) its case processing lacks coordination. To improve collection efforts, Congress is considering legislation to: (1) allow Justice to contract with private attorneys to assist in collecting debts; and (2) provide budgetary incentives to federal agencies for improved debt collection and credit management. Justice is taking steps to: (1) minimize the impact state laws and procedures have on the federal government's ability to recover debts; and (2) raise the amount of debts the Veterans Administration could litigate to $5,000. In addition, several federal agencies are working with the Internal Revenue Service to offset individuals' income tax refunds by delinquent debts.