What does cross-servicing refer to?

Cross-servicing refers to the process of referring delinquent debts to the U.S. Treasury for collection. This approach is part of a broader effort to manage and recover federal debts through centralized means, ensuring that debts owed to the government are addressed efficiently.

When debts are categorized as delinquent, they may be moved to the Treasury's collection system, where additional tools and resources are available to facilitate recovery, such as wage garnishments, tax refunds, or other actions. This coordination underscores the importance of leveraging federal resources to maximize debt recovery efforts and minimize financial loss to the government.

Other options, while related to debt management, do not accurately describe the specific process of cross-servicing. For example, collecting debts directly from customers pertains to the initial collections phase and does not involve the Treasury. Debt restructuring involves altering the terms of a debt to make it more manageable but does not specifically refer to Treasury referrals. Lastly, debt forgiveness refers to the cancellation of a debt obligation, which is distinct from the recovery actions taken under cross-servicing. Thus, the option that identifies cross-servicing as the referral of delinquent debts to the U.S. Treasury aligns accurately with federal debt recovery practices.