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Glossary of Terms Used for USAID's Automated Directives System (ADS) - Updated 07/15/2011 Partial Revision

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Term Definition
Discharge

To satisfy a debt as a legal obligation through the performance of the obligation imposed under the debt instrument, such as payment in full or compromise. A debt is discharged at the time an agency stops all efforts to recover the debt because, in effect, the agency is terminating the debt as a legal obligation of the debtor's to repay. Before discharging a debt, the Debt Collection Improvement Act requires agencies to take appropriate steps to collect the debt including offset, referral to private collection agencies, referral to Treasury or a Debt Collection Center, reporting to a credit bureau, administrative wage garnishment, and litigation. The discharge does not, however, satisfy the debtor's legal obligation to pay taxes on the debt, since it may represent taxable income to the debtor. Close out and discharge are used interchangeably in ADS 625 (USAID Automated Directives System - ADS - Chapter 625).

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