§ 761.406 — Types Of Debt Settlement

(a) Compromise. The Agency may compromise a debt owed to the Agency if the requirements of this subpart are met and:

(1) The borrower pays a lump sum as a compromise for the remaining unsecured debt; and

(2) The amount is reasonable based on the Agency's determination of what the borrower can pay to settle the debt.

(b) Adjustment. The Agency may settle a debt owed to the Agency through an adjustment agreement if the requirements of this subpart are met and:

(1) The borrower agrees to pay the adjustment amount for a period of time not to exceed 5 years; and

(2) The amount is reasonable based on the Agency's determination of what the borrower can pay to settle the debt; and

(3) The borrower provides documentation that funds are, or will be, available to pay the adjustment offer through its term.

(c) Cancellation. The Agency may cancel a debt owed to the Agency if the requirements of this subpart are met and the application and supporting documents indicate that the borrower is unable to pay a compromise or adjustment offer.