Section 1956.67 - Debts which the debtor is able to pay in full but refuses to do soDebts which the debtor may have the ability to pay in full but has refused to do so may be compromised or adjusted in the following situations on Form FmHA or its successor agency under Public Law 103-354 1956-1:
(a) When the full amount cannot be collected because of the refusal of the debtor to pay the debt in full and the OGC advises that the Government is unable to enforce collection in full within a reasonable time by enforced collection proceedings, the debt may be compromised. In determining inability to collect, the following factors will be considered:(1) Availability of assets or income which may be realized by enforced collection proceedings, considering the applicable exemptions available to the debtor under State and Federal law.(2) Inheritance prospects within 5 years.(3) Likelihood of debtor obtaining nonexempt property or income within 5 years, out of which there could be collected a substantially larger sum than the amount of the present offer.(4) Uncertainty as to price the security or other property will bring at forced sale.(b) The debt may be compromised or adjusted when the OGC has advised in writing that: (1) There is a real doubt concerning the Government's ability to prove its case in court for the full amount of the debt, and(2) The amount offered represents a reasonable settlement considering: (i) The probability of prevailing on the legal issues involved.(ii) The probability of proving facts to establish full or partial recovery, with due regard to the availability of witnesses and other pertinent factors.(iii) The probable amount of court costs and attorney's fees which may be assessed against the Government if it is unsuccessful in litigation.(c) When the cost of collecting the debt does not justify enforced collection of the full amount, the amount accepted in compromise or adjustment may reflect an appropriate discount for administrative and litigation costs of collection. Such discount will not exceed $2,000 unless the OGC advises that in the particular case a larger discount is appropriate. The cost of collecting may be a substantial factor in settling small debts but normally will not carry great weight in settling large debts.