FP-10

I. GENERAL STATEMENT ON ACCOUNTS RECEIVABLE
II. GENERAL COLLECTION PROCEDURES
III. FEDERAL STUDENT LOAN PROGRAM COLLECTIONS
IV. RETURNED CHECK COLLECTIONS
V. RENT COLLECTIONS
VI. COLLECTION AGENCIES
VII. BANKRUPTCY
VIII. LITIGATION

This financial procedure applies to the collection of accounts (the word "accounts" as used herein shall include notes) receivable by all departments of East Tennessee State University. This procedure is based on the Tennessee Board of Regents Guideline B-010. Each department accepting accounts receivable are to establish policies and procedures as required by Section II.

I. GENERAL STATEMENT ON ACCOUNTS RECEIVABLE

Each department shall, to the maximum extent possible, require payment in advance for all services and goods provided by the department, and thereby avoid the creation of accounts receivable.

A. The Board Policy on Payment of Fees and Enrollment of Students requires (with limited exceptions) that all assessed fees be paid in advance by a student before he or she is considered enrolled for any academic term.

B. It is recognized that accounts and notes receivable may be generated from certain programs and activities, including but not limited to student payment plans, student loan programs, family practice or other medical programs, housing utilities, traffic and parking fines, library fines, bad checks, contracts, the rental of property, and any damage, loss or liability to the institution/technology center by others. Each department, subject to the approval of the University Comptroller, is authorized to require any person to pay a deposit, post a security bond, or provide appropriate insurance to ensure full payment of any potential obligation to the institution arising from any program or activity.

Pursuant to T.C.A. Section 28-1-113 there is no time limit on the institutions’ or technology centers’ authority to collect receivables unless otherwise expressly provided by statute.
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II. GENERAL COLLECTION PROCEDURES

Each department shall establish a systematic process and procedures for the collection of accounts receivable from all persons, including students and employees of the University. The collection procedures and forms of each department are subject to the approval of the University Comptroller or his or her designee. The University Comptroller will, upon request, assume responsibility of the collection of certain departmental accounts receivable subject to the receipt of appropriate documentation of such obligations.

A. Collection efforts should begin no later than thirty (30) days after the occurrence of the obligation or other fixed due date.

B. Except as otherwise hereinafter provided, a minimum of three (3) letters of contact or billing requesting payment should be sent by the department at 30-day intervals once an account becomes delinquent. An account becomes delinquent based on the payment criteria established by the institution for the type of debt involved. For debts greater than $100, the third letter should indicate that the account will be referred to a collection agency if payment is not received with a specified period of time. Sending letters by certified mail is optional.

C. When an institution’s established collection efforts for the type of debt have failed to produce payment, these accounts are classified as defaulted. Any defaulted receivable of $100 or more shall be referred to a collection agency within a reasonable time after the final collection letter is sent if the debtor does not respond. Referral of accounts under $100 are not required. Except as provided for under Enrollment and Record Holds and Employee Receivables, no additional collection efforts are required for accounts under $100. See procedures for write-off of accounts receivable.

D. Employee receivables (including student employees) may result from, among other things, traffic and parking fines, library fines, institution/technology center services or bad checks. If the procedures in Section 2b have been met and the debt is still delinquent, the debt can be recouped from the employee’s paycheck. A notice of intent to withhold must be sent to the employee by registered or certified mail, or personally delivered. Within 15 calendar days of receipt of such notice, the employee must:

1. Pay the debt in full;

2. Authorize the institution to withhold a designated amount from each subsequent paycheck or, if the employee is terminating, from the accrued but unused annual leave until the debt is paid in full;

3. Elect to contest the intent to withhold through an institutional hearing; or,

4. Elect to contest the intent to withhold through a contested case hearing held pursuant to the Tennessee Uniform Administrative Procedures Act (TUAPA), TCA Section 4-5-301, et.seq.

Due to the complexity of the collection procedures regarding the following topics Sections 3a-d of the TBR Guideline No. B-010 should be consulted.

a) Limitations on Amounts to be Withheld,
b) Withholding From Retirement Funds, or
c) Recovery of Overpayments to Employees

E. Students must pay any past due debts and obligations incurred in prior terms and all known debts and obligations incurred during the current term before being permitted to pre-register for any future terms. An amount owed under the institution’s installment (deferred) payment plan for enrollment fees which is not yet considered due shall not cause a hold to be placed on the student’s records. A notice stating the specific amount due should be sent to each student prior to completion of registration. Pursuant to T.C.A. Section 49-9-108, no grade reports, certificates of credit, diplomas or transcripts will be issued to any student with any unpaid or delinquent debt or obligation owed to the institution or technology center unless such debt is secured by notes or other written contracts providing for future payment under federal or state education or student assistance acts. In addition, once a petition for bankruptcy has been filed, all holds should be lifted. The institution has no obligation to provide student grade reports, etc., unless specifically requested to do so. Accurate records of all correspondence, telephone calls and personal contacts with borrowers shall be maintained and all receivables should be aged at least annually. Institutions/ technology centers must comply with record maintenance, safekeeping, and retention regulations for federally-funded loans.
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III. FEDERAL STUDENT LOAN PROGRAM COLLECTIONS

Collection officers should consult the most recent legal authorities concerning federal loans. These authorities include interpretative materials, issues letters, manuals, Congressional Acts and the Federal Department of Education Regulations. The collection procedures for notes receivable are explained in detail by these authorities and includes but is not limited to the following areas of responsibility:

  1.   Pre-Loan Counseling
  2.   Exit Interviews
  3.   Grace Period Notices
  4.   Skip Tracing
  5.   Due Diligence Billings for On-time Borrowers
  6.   Deferments and Cancellations
  7.   Delinquent Loan Billings
  8.   Default and Acceleration
  9.   Write Off and Assignment Procedures
10.   Billing Loans Not Written Off

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IV. RETURNED CHECK COLLECTIONS

A. Pursuant to the TBR Policy on the Payment of Fees and Enrollment of Students (4:0l:03:00), if any student tenders payment of fees by a check that is subsequently dishonored by the bank, and the check is not redeemed within the specified time period, the institution has the option to not consider this student enrolled at the institution. At the Discretion of the institution, the student may be considered enrolled and will be assessed the applicable returned check fee, the late registration fee, and will be denied grade reports, transcripts and future registration privileges until such dishonored check is redeemed.

B. Any person other a student or employee who tenders a check for payment for goods or services which is subsequently dishonored shall be given the opportunity to redeem the check and pay the amount due in cash or money order within 10 days.

C. A total of three notices shall be sent for any unpaid check with the third notice being the "Final Notice" before the account is referred to an outside collection agency. Please consult the procedures detailed in Section II a-e of this Financial Procedure.

D. A check presented for payment of any goods or services which is subsequently dishonored shall be treated as an accounts receivable.  Any transactions that have been processed should be charged back to the departmental account when possible and appropriate.

E. Receipt of one or more bad checks from any person may result in that person becoming ineligible to make payments by check thereafter, or to have any check cashed by the institution/technology center. A record of individuals who have written bad checks should be maintained.
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 V. RENT COLLECTIONS

The terms of the lease should be consulted in the event of failure by the tenant to timely pay rent. In counties with populations more than 200,000 according to the 1970 federal census, the Tennessee Residential Landlord and Tenant Act (the ACT) applies and provides, at T.C.A. Section 66-28-505, that upon noncompliance with the rental agreement, the landlord shall deliver a written notice to the tenant specifying the noncompliance and stating that the rental agreement will terminate upon a date not less than thirty (30) days after receipt of the notice. If the noncompliance is not remedied in fourteen (14) days, the rental agreement shall terminate as provided in the notice. If the tenant remits the rental but subsequently again fails to pay rent within a 6 month period, the rental agreement may be terminated upon at least fourteen (14) days written notice specifying the noncompliance and the date of termination of the rental agreement. In counties where the ACT applies, written notice is required when rent is unpaid unless otherwise specifically waived in a written rental agreement. In counties where the ACT does not apply, it will provide guidance concerning landlord/tenant issues. Generally, the length of the notice period equals the rental period, for example, 30 days notice is required where rent is due monthly. In the event the rent remains unpaid at the end of the month, the institution/technology center should proceed with an action to evict the tenant. Accrued rents which are unpaid shall be treated as accounts receivable of the institution and collection procedures detailed in Section 2 should be followed.
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 VI. COLLECTION AGENCIES

The Tennessee Board of Regents shall provide, on a system wide basis, collection services through one or more companies. The service should provide for the referral of all types of delinquent accounts and notes from the institution to the designated company only after campus collection efforts have been exhausted. Unless otherwise prohibited by law or regulation, any note, contract or lease which may result in accounts receivable to the institution should contain a provision pursuant to which the person will be responsible for the costs of collection and reasonable attorney fees in the event of default. It should further provide for the assignment of the account or note to the proper agency. The services these agencies provide are described in detail in the TBR Guideline B-010 and include topics such as:

1. Outside Billing Services
2. Credit Bureau Reporting
3. Collection Agency Referral
        a. Reporting Requirements by Collection Agencies
        b. Revised Repayment Plans
        c. Recalling Accounts from Collection Agencies
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VII. BANKRUPTCY

The Bursar’s Office of East Tennessee State University will designate at university contact for all bankruptcy claims regarding accounts and notes receivables. All bankruptcy claims and debt documentation should be sent to the Bursar’s Office to be forwarded to the Tennessee State Attorney General’s Office. No further action against the debtor should be taken until notice of final discharge is received from the Tennessee State Attorney General’s Office.
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 VIII. LITIGATION

A. After all other attempts at collection have failed with general accounts receivables, the institution must authorize litigation of any account of $500 or more providing that the litigation costs do not exceed the amount which can be recovered. Generally the collection services contract will provide for litigation where appropriate.

B. If a federal loan cannot be litigated for any of the following reasons, it should be assigned to the U.S. Department of Education: (1) Borrower has no assets (2) Address Unknown (SKIP) (3) Debtor is incarcerated (4) Debtor is on Public Assistance, (5) Unable to serve borrower with court papers, (6) Litigation is in process and debtor skips, (7) Expected cost of litigation exceeds amount to be recovered from borrower.

C. For any additional information regarding collection of accounts and note receivable refer to TBR Guideline B-010.
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Original effective date: March 31, 1985
Revised: October 17, 2000; September 21, 2001; October 2, 2003
Last review: October 2, 2003


Web page last updated 09/21/04