(a) NEH may suspend collection activity on a debt when:
(1) NEH cannot locate the debtor;
(2) NEH expects the debtor's financial condition to improve; or
(3) The debtor has requested a waiver or review of the debt.
(b) NEH may suspend collection activity on a debt when, based on the debtor's current financial condition, the debtor's future prospects justify retention of the debt for periodic review and collection activity and:
(1) The applicable statute of limitations has not expired; or
(2) Future collection can be effected by administrative offset, notwithstanding the expiration of the applicable statute of limitations for litigation of claims, with due regard to the ten-year limitation for administrative offset prescribed by 31 U.S.C. 3716(e)(1); or
(3) The debtor agrees to pay interest on the amount of the debt on which collection will be suspended, and such suspension is likely to enhance the debtor's ability to pay the full amount of the debt with interest at a later date.
(c)
(1) NEH will suspend collection activity during the time required to consider the debtor's request for waiver or administrative review of the debt, if the statute under which the debtor makes the request prohibits NEH from collecting the debt during that time.
(2) If the statute under which the debtor makes the request does not prohibit collection activity pending consideration of the debtor's request, NEH may use discretion, on a case-by-case basis, to suspend collection. Further, NEH ordinarily will suspend collection action upon a request for waiver or review if a statute or regulation prohibits NEH from issuing a refund of amounts it collected prior to considering the debtor's request. However, NEH should not suspend collection when it determines that the request for waiver or review is frivolous or was made primarily to delay collection.
(d) If NEH learns that a bankruptcy petition has been filed with respect to a debtor, in most cases it must suspend the collection activity on that debtor's debt, pursuant to the provisions of 11 U.S.C. 362, 1201, and 1301, unless NEH can clearly establish that the automatic stay has been lifted or is no longer in effect. NEH will immediately seek legal advice from its Office of the General Counsel and, if legally permitted, take the necessary legal steps to ensure that the agency does not pay any funds or money to the debtor until it obtains relief from the automatic stay.