Debt Management

RECEIVABLES AND DEBT MANAGEMENT

The Department has incorporated the principles of the Credit Reform Act of 1990 into the operations of its credit and debt programs. Prescreening procedures, account-servicing standards, determined collection of delinquent debt, inventory management, and asset disposition standards have helped to diminish significantly the amount of risk inherent in credit programs. These procedures were established to ensure that credit costs are properly identified and controlled, that borrowers’ needs are met, and that costs to the taxpayers are minimized.

GROSS RECEIVABLES
*(Dollars in Millions)*
	FY 2001	FY 2002	FY 2003	FY 2004	FY 2005
Over 180 Days Delinquent	$ 72	$ 73	$150	$151	$ 72
Total Delinquencies	$ 79	$168	$157	$155	$ 77
Gross Receivables	$411	$455	$447	$490	$516

The Department’s gross receivables increased minimally, from $490 million at September 30, 2004 to $516 million at September 30, 2005, as reported on the Department’s Treasury Report on Receivables (TROR). The TROR is the primary means for the Department to provide comprehensive information on its gross receivables and delinquent debt due from the public. Debt over 180 days delinquent decreased significantly from $151 million at September 30, 2004 to $72 million at September 30, 2005. This decrease is mainly due to a large collection on a loan receivable, made possible by a liquidation, under bankruptcy, of the borrower’s assets. As a result, total delinquencies, as a percentage of gross receivables, also decreased significantly, from 31.7 percent at September 30, 2004 to 13.9 percent at September 30, 2005.

TOTAL DELINQUENCIES AS A PERCENTAGE OF GROSS RECEIVABLES
FY 2001	FY 2002	FY 2003	FY 2004	FY 2005
19.1%	36.9%	35.0%	31.7%	13.9%

The Debt Collection Improvement Act of 1996 established the Treasury Department as the collection agency for eligible federal agency debts that are more than 180 days delinquent. It also established Treasury’s Financial Management Service as the federal government’s debt collection center. Over $17 million in delinquent debt has been referred to Treasury for cross-servicing since FY 1998.

During FY 2001, the issuance of the revised Federal Claims Collection Standards and the revised OMB Circular No. A-129, Policies for Federal Credit Programs and Non-Tax Receivables, provided agencies greater latitude to maximize the effectiveness of federal debt collection procedures. Since then, the Department has utilized all the tools available to improve the management of its debt.

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