Applicability of Statute of Limitations to Administrative Debt Collection Practices

B-198458: Published: Aug 6, 1980. Publicly Released: Aug 6, 1980.

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GAO's advice was sought concerning the applicability of the statute of limitations to administrative debt collection procedures. A 6-year limitation on civil actions brought by the Government for money damages or to recover money erroneously paid to a Federal employee is provided by law. Conflicting views exist on this applicability. The Department of Justice concluded that the 6-year limitation extends to the Office of Personnel Management's ability to deduct or administratively offset against retirement or annuity payments, debts which could not be pursued in court because of the statute of limitations. GAO took a contrary position, the statute of limitations has no application to administrative setoff. GAO views were sought concerning the applicability of the statute of limitations to reporting delinquent debts to credit bureaus, the Veterans Administration (VA) Repayment Program, and the VA procedure of withholding approval of VA home loan guaranty applications for veterans with delinquent education overpayments until satisfactory arrangements are made for repayment of the delinquent debt. GAO believes that the statute has no application to these administrative debt collection activities. It also in no way impinges on the right to offset. GAO believes that the statute of limitations applies only to the right to bring suit; any other efforts to collect debts is unaffected by this limitation. VA may use any lawful administrative action in an effort to achieve repayment of time-barred debts. Although the law does not affect the VA proposal to report delinquent debts to consumer credit agencies, it imposes certain limitations on the use of delinquent debt information, prohibiting consumer reporting agencies from including in consumer reports information that antedates the report by more than 7 years. Although frequent or persistent failure to pay debts can be grounds for dismissal from Federal employment, failure to pay a single debt is not.

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