§3720C Debt Collection Improvement Account

Summary

Creates a special Treasury fund called the Debt Collection Improvement Account. The Treasury Secretary must run the fund and make sure agencies get credit for amounts they put in. Within 30 days after a fiscal year ends, an agency may send money to the fund from certain collections, such as offsets, work done with the Justice Department, private collectors, sales of delinquent loans, and contracts to find or recover assets. The amount an agency may transfer is based on a formula: 5% of the delinquent debt the agency collected that year minus the greater of 5% of last year’s collections or 5% of the average yearly collections over the past four years. The Office of Management and Budget, with Treasury, can adjust that amount to reflect how much effort an agency spends on credit management, using measures like how long debts sit before referral and the share of receivables that are delinquent. Treasury can pay agencies back from the fund only for approved expenses that improve credit management and debt recovery—things like account servicing, computer equipment, collecting delinquent debt, selling debt, disposing of assets, and staff training. Money can only be spent if Congress approves it in advance. Any unspent balance must be moved to the Treasury’s general fund after the third fiscal year money is first available and every three years after that. For certain direct loan and loan guarantee programs, credited amounts count as administrative costs. The Treasury Secretary must write rules needed to run the fund.