Food Stamps

1142.055.05 Compromising Claims

IM-#82 August 28, 2007,  IM-#142 December 2, 2005

Consider all AE and IHE claims for compromise when contacted by the EU. “Compromise” is reduction of a claim balance. The claim balance can be reduced to zero. The demand letter advises the EU to contact the county FSD office if circumstances exist that impact the EU’s ability to repay the claim amount. If the EU contacts FSD and indicates they will have difficulty paying the claim, consider compromising the claim. Claims are compromised as follows:

  • A demonstration of need. An EU proves an inability to repay a claim within a three-year period. An active food stamp EU meets this demonstration of need as the EU’s income meets Food Stamp Program eligibility. If the EU indicates they will have difficulty paying the claim and they are receiving food stamp benefits, complete the process to compromise the claim.Supervisory approval of county manager or above is needed to compromise a claim amount based on need. Use the current monthly benefit amount to determine a claim balance that can be repaid through recoupment in a three-year period. Reduce the claim amount to the balance that can be paid in a three-year period. Submit a CARS-2 using transaction type 21, compromise method of settling claims, and record information about the action taken on OVNA. The claim can only be compromised one time. Notify the EU of the decision on form IM-112, Action Taken on Your Food Stamp Case.

    EXAMPLE: An AE claim is established for $800. The EU is receiving food stamp benefits of $130 monthly. Applying a 10 percent reduction is $13, which is greater than $10. Multiply $13 by 36 months to equal $468. Reduce the claim amount to $468 by submitting the CARS-2 for $332 credit, transaction code 21.

  • A demonstration of hardship. An EU proves that financial, physical or mental hardship would exist if forced to pay. Such situations include, but are not limited to medical hardships, loan payments, etc. For situations where a hardship is being claimed, a summary of the information relevant to the compromise request is submitted to the Food Stamp Program and Policy Unit. Program and Policy staff will render a decision after considering EU circumstances.If any responsible member of a claim contacts FSD, indicates they will have difficulty paying the claim, and are not receiving food stamp benefits, complete a Request for Reduction (CARS-8) form and send to the Food Stamp Program and Policy Unit. The member does not have to specifically say they want a reduction of the claim amount. This option is offered if a hardship is indicated. The Food Stamp Program and Policy Unit reviews the situation, makes a determination, and notifies the county office. Notify the EU on an IM-112 of the decision.
  • Court ordered restitution. All claims reduced or compromised by a decision made through the court will be considered a compromised claim. No further compromises will be applied against any court restitution claim unless granted by further court action.

IPV/SPV claims are not compromised.