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U.S. Threatening to Seize Cars, Homes of Deadbeats : Seeks to Recover $68 Billion

July 22, 1987|Associated Press

WASHINGTON — The Reagan Administration today announced a crackdown on individuals who owe the government about $68.3 billion in delinquent loans and taxes, saying it will even move "to seize cars, homes, any assets" if necessary to collect.

"This is a message to every American who owes the federal government money: Hands up, we've got you covered," Budget Director James C. Miller III told a news conference in announcing the new collection policy.

Miller said the government will also:

--Begin dunning all federal employees, including members of the military and employees of Congress and the judicial branch, for long-overdue loans by withholding up to 15% from their monthly paychecks.

--Turn over a greater number of past-due accounts to private collection agencies.

--Report all government loans on which payments are 31 days overdue to local credit bureaus.

--Press for congressional renewal of 1984 legislation, which expires later this year, allowing the government to continue to deduct delinquent loans from federal income tax refunds.

Confidence in Government

"It's dragnet time," Miller said. "This will give people the confidence that their government is fiduciarily sound."

On the proposal to go after personal assets, Miller said: "I will personally ask the attorney general to seize cars, homes, any assets. . . .

"If people refuse to pay up, then we will go after these things. We're not going to just give up," he added.

Deputy Budget Director Joseph Wright, elaborating on Miller's remarks, said the Justice Department will work through state and local authorities in filing lawsuits.

He said the program will be based on an experiment conducted in Philadelphia in 1983, in which 35 cars were seized belonging to individuals who had not repaid their student loans.

33 Owners Reclaim Cars

The loans were paid and 33 of the cars reclaimed, Wright said.

Of the $68.3 billion in delinquent debt, $41.9 billion reflects long-overdue taxes and the remaining $26.4 billion reflects delinquent loans.

The loans will be the focus of the new collection effort, Wright said, since "the IRS has proven to be a pretty effective collector of delinquent taxes."

He said $5 billion of the delinquent loans were incurred by students and $10 billion by farmers. Small business loans, Veterans Administration loans and housing loans make up most of the rest.

Wright said that 141,000 federal employees who owe $346.7 million to the government will soon be receiving notices that their paychecks will be garnished if the loans aren't repaid.

Taxpayers Already Paying

Similar notices will go out later this year to employees of Congress and the judicial branch.

"We don't see any reason why anyone being paid a salary by the taxpayer shouldn't repay their delinquent loans," Wright said.

He said members of Congress had not been told in advance about the plan, which he said does not require legislation.

However, he added: "We'll talk to them first. (Otherwise) it would not be politically wise."

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