Page:United States Statutes at Large Volume 106 Part 3.djvu/209

 PUBLIC LAW 102-408—OCT. 13, 1992 106 STAT. 2003 Federal insurance on loans granted pursuant to this subpart until he is satisfied that its failure hsis ceased and finds that there is reasonable assurance that the lender will in the fiiture exercise necessary care and diligence, exercise substantial effort, or comply with such requirements, as the case may be. "(e) DEFINITIONS. —For purposes of this section: or its authorized assignee in accordance with section 706(c). "(2) The term 'amount of the loss' means, with respect to a loan, unpaid balance of the principal amoiint and interest on such loan, less the amount of any judgment collected pursuant to default proceedings commenced by the eligible lender or holder involved. "(3) The term 'default' includes only such defaults as have existed for 120 days. " (f) REDUCTIONS IN FEDERAL REIMBURSEMENTS OR PAYMENTS FOR DEFAULTING BORROWERS.—The Secretary shall, after notice and opportunity for a hearing, cause to be reduced Federal reimbursements or payments for health services under any Federal law to borrowers who are practicing their professions and have defaulted on their loans insured under this subpart in amounts up to the remaining balance of such loans. Procedures for reduction of payments under the medicare program are provided under section 1892 of the Social Security Act. Notwithstan^ng such section 1892, any funds recovered under this subsection shall be deposited in the insurance fund established under section 710. " (g) CONDITIONS FOR DISCHARGE OF DEBT IN BANKRUPTCY.— A debt which is a loan insured under the authority of this subpart may be released by a discharge in bankruptcy under any chapter of title 11, United States Code, only if such discharge is granted— "(1) after the expiration of the five-year period beginning on the first date, as specified in subparagraphs (B) and (C) of section 705(a)(2), when repa3rment of such loan is required; "(2) upon a finding by the Bankruptcy Court that the nondischarge of such debt would be unconscionable; and "(3) upon the condition that the Secretary shall not have waived the Secretary's rights to apply subsection (f) to the borrower and the discharged debt. "(h) REQUIREMENT REGARDING ACTIONS FOR DEFAULT.— "(1) IN GENERAL.—With respect to the default by a borrower on any loan covered by Federal loan insurance under this subpart, the Secretary shall, under subsection (a), require an eligible lender or holder to commence and prosecute an action for such default unless— "(A) in the determination of the Secretary— "(i) the eligible lender or holder has made reasonable efforts to serve process on the borrower involved and has been unsuccessful with respect to such efforts, or "(ii) prosecution of such an action would be fruitless because of the financial or other circumstances of the borrower; "(B) for such loans made before the date of the enactment of the Health Professions Reauthorization Act of 1988, the loan involved was made in an amount of less than $5,000; or
 * (1) The term 'insurance beneficiary* means the insured

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