H.B. NO.














relating to debt collection.





SECTION 1. Chapter 28, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"28-    Civil recoveries fund. (a) There is established in the state treasury the civil recoveries fund into which shall be deposited:

(1)      per cent of any moneys collected by the attorney general for any executive department which has turned over delinquent accounts for collection pursuant to section 40-82.5(b); and

(2) Appropriations made by the legislature.

(b) The civil recoveries fund shall be administered by the department of the attorney general and shall be used for expenditures relating to the collection of delinquent accounts of executive departments, including expenditures for training or educational resources, all appropriate non-litigation collection methods, filing fees, and litigation costs.

(c) The department of the attorney general shall submit a report to the legislature no later than twenty days prior to the convening of each regular session to provide an accounting of the receipts and expenditures of the fund."

SECTION 2. Section 40-82, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) [The directors, boards, or executive heads of executive departments, from time to time, may prepare and submit for the review of the attorney general a list of all uncollectible accounts in their departments. Such accounts as the attorney general finds to be] The attorney general may, from time to time, prepare a list of delinquent accounts that are uncollectable and for which the attorney general has assumed the collection in accordance with section 40-82.5(b). The delinquent accounts that the attorney general finds to be uncollectible shall be entered in a special record and be deleted from the accounts receivable records of the departments, [which] and the department and the attorney general shall thereupon be relieved from any further accountability for their collection; provided that no account shall be so deleted until it shall have been delinquent for at least two consecutive years. Any account entered in the special record shall be transferred back to the current accounts receivable if the attorney general finds that the facts as alleged [and presented to the attorney general] were not true, or that the account has become collectible.

As used in this section, "uncollectible account" means an account with regard to which:

(1) The debtor or party causing damage to property belonging to the State is no longer within the jurisdiction of the State;

(2) The debtor or party causing damage to property belonging to the State cannot be located;

(3) The party causing damage to property belonging to the State is unknown or cannot be identified;

(4) The [debtor has filed for] debt has been discharged in bankruptcy [and has listed the State as a creditor]; or

(5) Any other account as may be deemed by the attorney general to be uneconomical or impractical to collect."

SECTION 3. Section 40-82.5, Hawaii Revised Statutes, is amended to read as follows:

"40-82.5 Delinquent accounts, collection. [Any state agency] (a) The judiciary, department of taxation, or University of Hawaii, having an account due which is delinquent, may contract with a collection agency bonded under chapter 443B for collection of the delinquent account. The [chairperson or director of the agency] judiciary, department of taxation, or University of Hawaii may make an agreement with the agency regarding the amount to be retained by it for services.

(b) Any executive department, except the department of taxation or University of Hawaii in accordance with subsection (a), having an account due which is delinquent more than ninety days shall turn the delinquent account over to the attorney general for collection. For all accounts successfully collected for an executive department by the attorney general, the attorney general shall retain      per cent to be deposited in the civil recoveries fund in accordance with section 28-   (a)(1), and the remainder of the moneys collected shall be returned to the executive department to be deposited into the fund or expended for the purpose for which it was originally intended."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2013.








Report Title:

Attorney General; Loan Servicing; Delinquent Accounts



Requires the Attorney General to collect on accounts delinquent for more than ninety days for executive departments, except the Department of Taxation and University of Hawaii, and retain an unspecified per cent of moneys recovered on delinquent accounts for deposit into a newly-established fund. Allows the Department of Taxation, the University of Hawaii, and the Judiciary to contract with a collection agency to collect on delinquent accounts. Effective July 1, 2013.




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