Chapter 13 Policy Overview
Old Policy New Policy
“Repayment Agreement” “Payment Agreement” 13.1 Introduction Removed the heading only 13.1.A Assessing Debt 13.1 Assessing Debt
13.1.B File Audit 13.2 File Audit 13.1.C Family Misrepresentation 13.2.A
13.1.D Recovery of Debt 13.2.B
13.2 Hardship Exemption 13.3 Minimum Rent Exemption
13.3 Late Rent Fee Moved to Exhibit 6-6, Other Charges Due Under the Lease
13.4 Repayment Agreements 13.4 Payment Agreements 13.4.A Guidelines to Offer RAs 13.4.A Guidelines
13.4.B Guidelines to Complete a RA 13.4.B Approval Levels left here
Other info moved to the Administrative Desk Manual
13.4.C Guidelines to Complete a Security
Deposit RA Moved to the Administrative Desk Manual 13.4.D Guidelines to Complete a Pet
Deposit RA Moved to the Administrative Desk Manual 13.4.E First Payment Due Date 13.4.C First Payment Due Date 13.4.F Balloon Payments 13.4.D Balloon Payments 13.4.G Executing the RA 13.4.E Executing the PA 13.4.H Default of RA Notices 13.5 Default Notices 13.4.I Satisfaction of RA 13.6 Satisfaction 13.5 Debts Dismissed due to Bankruptcy
Action
13.7 Debts Dismissed due to Bankruptcy Action
Forms
PW304 Payment Agreement
PW306 Payment Agreement Default PW307 Payment Agreement Final Notice PW311 File Audit Calculation
LR414 Possible File Discrepancy
Administrative Desk Manual
Chapter 13
Debt
Public Housing families are required to report changes in income and family
composition. A family who fails to report income properly may cause AHFC to overpay subsidy. The family must then repay AHFC the difference between subsidy that was paid and subsidy that should have been paid.
13.1 ASSESSING DEBT
To assess a debt against a family, AHFC must:
1. Obtain third party documentation to support its claim that the debt is owed. 2. Conduct an audit and document the method of calculation for review by the
family or other authorized parties.
3. Compute the amount of debt the family owes.
4. Discuss the debt with the family prior to taking any adverse action. Send the Possible File Discrepancy (form LR414) to schedule an appointment.
5. Determine if the family intentionally misrepresented income.
If AHFC receives information that differs from information in the client file, then AHFC will investigate the new information. This may include contacting the source of the new information, sending third party verification, or running a public records check. This information will not be part of the client file until it has been verified or discussed with the family.
AHFC will bring the family in for an appointment to discuss the discrepancy if: AHFC cannot determine the cause of the discrepancy; or
AHFC receives verification that the family may have failed to report their income or household composition.
AHFC will document the results of the discussion and determine if the file discrepancy should be closed or if AHFC will proceed with further verification.
13.2 FILE AUDIT
When staff verifies that a discrepancy has occurred, conduct an audit of the family file to determine the amount of overpaid or underpaid subsidy. Each subsidy month’s discrepancy must be detailed so that the family can understand how AHFC arrived at the final overpayment or underpayment amount.
Complete the File Audit Calculation, form PW311. The final amount must be provided to the family in written form. The family has the right to grieve AHFC’s audit.
13.2.A Family Misrepresentation
AHFC will assess and investigate allegations of possible program violations and fraud in all rental assistance programs. Please see Exhibit 13-1, Program Violations and Fraud Control.
Families that owe money to AHFC due to the family's failure to report increases in income or household composition must pay back the overpaid subsidy they were not entitled to receive.
13.2.B Recovery of Debt
AHFC will use a variety of collection tools to recover debts, including but not limited to, requests for lump sum payments, civil suits, small claims suits, payment agreements, assignment of or execution on the Permanent Fund Dividend, and collection agencies. A Public Housing participant family that owes money to AHFC is not in good standing. The family can only attain good standing by paying all sums due.
If the court awards AHFC monies, the PHD Management Specialist will execute on the Permanent Fund Dividend.
AHFC will retain the debt as long as the family continues to pay the agreed amount each month.
13.3 MINIMUM RENT EXEMPTION
A family subject to the requirement to pay a minimum rent has the right to ask for an exemption. See Exhibit 10-3 for the Minimum Rent Hardship Exemption procedure.
13.4 PAYMENT AGREEMENTS
A payment agreement is a document entered into between AHFC and a family who owes a debt to AHFC. It is similar to a promissory note, but contains more details regarding the nature of the debt, the terms of payment, any special provisions of the agreement, and the remedies available to AHFC upon default of the agreement. A payment agreement is a legal instrument that AHFC may use in court should the family default.
13.4.A Guidelines
Research each family’s debt on an individual basis to determine the family’s payment history and ability to repay.
1. Offer a Payment Agreement
Staff may offer a payment agreement to families in the following circumstances.
a. Families that can provide evidence that a misunderstanding or
miscommunication of program rules resulted in their noncompliance. b. When debts result from a family member who will no longer reside in the
unit.
c. As a reasonable accommodation.
d. Other good cause as determined by AHFC.
2. Do Not Offer a Payment Agreement
A family is not eligible for a payment agreement in the following circumstances:
a. If the family has a current payment agreement (see #3 below).
b. If the family has failed to make timely payments on a previous payment agreement offered within the last 12 months.
c. If AHFC determines that the family has committed program fraud. d. To families who owe debt because AHFC did not process a subsidy
decrease pending a grievance hearing.
e. To families that demonstrate willful noncompliance with program obligations. For example, if the family failed to report income at the June 2008 examination certifying the income was accurate and then had unreported income that is discovered at the June 2009 examination. f. An applicant family who owes debt.
g. To families terminated for program noncompliance. Those families may pay AHFC directly to avoid referral to a collection agency.
h. To families convicted of program fraud by the Attorney General’s office who are subject to payment terms imposed by the court. The debtor may make payments to AHFC directly to avoid referral to a collection agency. i. To families that willfully fail to report income or household changes
properly a second time.
3. Existing Agreement
Staff will not sign a new payment agreement for any new debt if the family has an existing agreement. Any new debt must be paid in full unless the regional manager approves the addition of new debt to an existing payment agreement or approves the family to sign a new payment agreement.
If approved, a new payment agreement will need to be executed with the family. Do not alter the existing payment agreement with the new amounts or
terms. Please remember that the HPS will need to include the regional manager’s approval with the new payment agreement.
13.4.B Approval Levels
AHFC will consider a family’s total income when determining an appropriate monthly payment. Staff should negotiate payments the family can afford.
1. Asset Supervisors and Technicians
An asset supervisor or technician is authorized to execute a payment agreement with a family with the following limitations:
a. The maximum amount (debt) is $1,200.
b. The maximum length of time (term) is twelve (12) months.
c. The down payment is one-tenth (1/10th) of the total amount due OR $25.00, whichever is greater.
d. The down payment must be paid at the time the payment agreement is executed.
e. The minimum monthly payment is one-twelfth (1/12th) of the balance (debt minus down payment) OR $25.00, whichever is greater.
2. Regional Managers
AN RM is authorized to execute a payment agreement with a family with the following limitations:
a. The maximum amount (debt) is $2,400. b. A term in excess of twelve (12) months.
c. A waiver of the down payment or a down payment less than $25. d. A minimum monthly payment less than $25 per month.
e. Regional Managers indicate their approval of deviations from payment agreement guidelines by:
1) Initialing on the first page of the payment agreement, or
2) Sending staff an e-mail stating their approval. The e-mail is filed with the Payment Agreement.
3. Director of Housing Operations
a. Any payment agreements in excess of $2,400 must be submitted to the Director of Housing Operations for approval.
b. The Director of Housing Operations can indicate his/her approval of the payment agreement by:
2) Sending the regional manager an e-mail stating his/her approval. The regional manager will be responsible for forwarding the approval to staff.
4. Director of Public Housing
a. The Director of Housing Operations will refer Payment Agreements to the Public Housing Director for approval where necessary.
b. The Director of Public Housing can indicate his/her approval of the payment agreement by:
1) Initialing on the first page of the payment agreement, or
2) Sending the regional manager an e-mail stating his/her approval. The regional manager will be responsible for forwarding the approval to staff.
5. Modifications Due to Family Hardship
Monthly payments may be decreased in cases of hardship. To qualify for a reduced monthly payment amount:
a. The family must provide written notice within ten (10) business days of the hardship occurrence.
b. The family must submit documentation verifying the hardship. c. The hardship must be for a period in excess of 30 calendar days.
Staff will research the family’s request for a payment modification and make a recommendation to the regional manager. Upon approval by the regional manager:
a. If the approved payment modification is temporary (90 days or less), document the temporary modification by sending a letter to the family with the temporary terms.
b. If the approved payment modification will last longer than 90 days or is a substantial alteration of the terms of the payment agreement, execute a new payment agreement with the family.
13.4.C First Payment Due Date
A payment agreement payment is due on the first day of each month. It is late if not received by the close of business on the sixth day of each month. Staff may not choose alternate due dates for payment agreements.
If the payment agreement is signed between the first (1st) and fifteenth (15th) of the month, the first payment is due on the first of the following month. For example, if the payment agreement is signed on May 10, the first payment is due June 1.
If the payment agreement is signed between the 16th and the end of the month, the first payment is due on the first day of the second month. For example, if the payment agreement is signed on June 25, the first payment is due August 1.
13.4.D Balloon Payments/Permanent Fund Dividends
A family may offer to make a future balloon payment or may elect to assign all or a portion of a Permanent Fund Dividend (PFD) to help satisfy an outstanding debt. A family may also assign a PFD to help reduce the amount of monthly payments. Many clients also use their PFD to pay off the balance of an outstanding debt or payment agreement.
1. A family cannot assign a PFD in lieu of monthly payments.
2. A family cannot promise to make a balloon payment in lieu of monthly payments.
On the PFD web site, under the forms section, there is a PFD assignment form. Note that this form is revised each year. It cannot be filed with the Department of Revenue before April 1. There is also a deadline in late summer/early fall for filing, depending on the distribution date of the PFD. Please see the PFD web site at www.pfd.alaska.gov. Detail the conditions of any balloon payment in the Special Provisions section of the payment agreement.
Example: Details of a Balloon Payment
“A balloon payment of $__ is due no later than the close of business on December 1, 2XXX. This payment is in addition to the scheduled, monthly payment.”
“A balloon payment in an amount equal to the 2XXX Permanent Fund Dividend (PFD) is due no later than the close of business on December 1, 2XXX. This payment is due regardless of whether the PFD is received or not.”
13.4.E Executing the Payment Agreement
Reference the Administrative Desk Manual, Payment Agreements, for instructions on completing a Payment Agreement. Meet with the family to sign the payment agreement
and collect the down payment. Review the terms and monthly payment deadlines with the family. Review any special provisions the family may request.
Explain to the family what will happen if the family does not pay as agreed. Explain to the family that they have the right to ask for a renegotiation of their payment agreement if the family experiences a hardship (please see the hardship section below).
If a regional manager’s approval is required for the payment agreement, make sure the approval is obtained in advance of the appointment.
Instructions - Complete the Appointment
1. The down payment amount must be paid by the family.
2. Each adult family member must sign and date the payment agreement (should the payment agreement go into default, only those family members that sign the payment agreement are obligated).
3. AHFC’s representative must sign and date the payment agreement.
4. Make a copy of the executed payment agreement and provide it to the family. 5. Make a copy for the collection desk, if necessary.
6. Place the original in the client file.
13.5 DEFAULT NOTICES
AHFC offers the family ample time to pay back debt before terminating rental
assistance. The family will receive notices that they have missed payment and will be allowed opportunities to repay the debt. AHFC may terminate assistance for families that fail to make required payments.
13.5.A Missed Monthly Payment or Balloon Payment
The family is considered in default on a monthly payment on the first business day following the sixth day of the month. The family is considered in default on a balloon payment on the first business day following the due date of the payment.
At the time of the first missed monthly payment, send the family a Payment Agreement Default, form PW306, on the first business day following the sixth day of the month. This letter warns the family that their payment agreement is in default.
The Payment Agreement Default specifies the following:
1. The payment amount due and the missed payment month. 2. The amount the family must pay to no longer be in default.
4. Failure by the family to bring their payments up to date may result in termination of their housing assistance.
5. How to contact AHFC.
AHFC staff will give the family ten (10) calendar days to bring their payment
agreement current. If the family pays the amount due by the date it is due, the family is in good standing.
13.5.B Nonpayment of Default Notice
If the family does not make their payment by the date specified on the Payment
Agreement Default, send the Payment Agreement Final Notice, form PW307. The Payment Agreement Final Notice specifies the following:
1. The family has thirty (30) calendar days to catch up payments or pay the balance due in full.
2. The amount due for monthly payments, and the total balance due on the payment agreement.
3. The date either payment is due.
4. Failure by the family to bring their payments up to date may result in termination of their housing assistance.
5. How to contact AHFC.
If the family pays the amount due by the date it is due, the family is in good standing.
13.5.C Nonpayment of Final Notice
If the family does not make their payment by the date specified on the Payment
Agreement Final Notice, the client account will be sent to Central Office for collection. All terminated client files that have payment agreement balances or debts must be
forwarded to the Central Office for collection action. Do not send these files to archive.
13.6 SATISFACTION
Close out the payment agreement when a family successfully settles the debt. The closeout process makes the payment agreement a non-negotiable instrument.
Instructions –Closeout Payment Forms
1. Draw a diagonal line through the front page of the payment agreement. 2. Write “Paid in Full” across the front page of the payment agreement. 3. Sign your name or initials and enter the date.
4. File the fulfilled payment agreement and any associated correspondence in the client file.
13.7 DEBTS DISMISSED DUE TO BANKRUPTCY ACTION
If a debtor has filed for bankruptcy in an appropriate judicial venue, these debts will be liquidated at the direction of the Bankruptcy court.
AHFC retains all other debts with their documentation. These debts will remain on the books of AHFC, and AHFC will follow appropriate state statutes for debt collection.
