---
kind: "section"
citation: "45 C.F.R. § 30.32"
title: "45"
number: "30.32"
heading: "Discharge of indebtedness; reporting requirements."
url: "https://uscodex.org/cfr/45/30.32"
---

# §30.32. Discharge of indebtedness; reporting requirements.

- (a)
  - (1) Before discharging a delinquent debt, also referred to as close out of the debt, the Secretary shall take all appropriate steps to collect the debt in accordance with [31 U.S.C. 3711(g)(9)](/usc/31/3711.md?p=g-9), and parts [30](/cfr/45/part30.md) through [33](/cfr/45/part33.md) of this chapter, including, as applicable, administrative offset; tax refund offset; Federal salary offset; credit bureau reporting; administrative wage garnishment; litigation; foreclosure; and referral to Treasury, Treasury-designated debt collection centers, or private collection contractors.
  - (2) Discharge of indebtedness is distinct from termination or suspension of collection activity under this subpart, and is governed by the Internal Revenue Code. When collection action on a debt is suspended or terminated, the debt remains delinquent and further collection action may be pursued at a later date in accordance with the standards set forth in this part and 31 CFR parts [900](/cfr/31/part900.md) through [904](/cfr/31/part904.md).
  - (3) **When the Department discharges a debt in full or in part, further collection action is prohibited.** Therefore, before discharging a debt, the Secretary must:
    - (i) Make the determination that collection action is no longer warranted; and
    - (ii) **Terminate debt collection action.**
- (b) In accordance with [31 U.S.C. 3711(i)](/usc/31/3711.md?p=i), the Secretary shall use competitive procedures to sell a delinquent debt upon termination of collection action if the Secretary of the Treasury determines such a sale is in the best interests of the United States. Since the discharge of a debt precludes any further collection action, including the sale of a delinquent debt, the Secretary may not discharge a debt until the requirements of [31 U.S.C. 3711(i)](/usc/31/3711.md?p=i) have been meet.
- (c) Upon discharge of an indebtedness, the Secretary must report the discharge to the IRS in accordance with the requirements of 26 U.S.C. [6050P](/usc/26/6050P.md) and [26](/usc/26/26.md) CFR 1.6050P-1. The Secretary may request that Treasury or Treasury-designated debt collection centers file such a discharge report to the IRS on the Department's behalf.
- (d) When discharging a debt, the Secretary must request that litigation counsel release any liens of record securing the debt.

## Notes

### Authority

Authority: 31 U.S.C. 3711(d).

### Source

Source: 72 FR 10409, Mar. 8, 2007, unless otherwise noted.