Certified Government Financial Manager (CGFM) Practice Exam

Question: 1 / 875

What is the primary purpose of an offset in managing delinquent debt?

To reduce the amount of tax collected

To encourage early repayment of loans

To withhold payment from those with debts

The primary purpose of an offset in managing delinquent debt is to withhold payment from those with debts. This mechanism allows a creditor or a government entity to deduct the amount owed directly from payments that would typically be disbursed to the debtor, such as federal tax refunds or other benefits. By doing so, the entity effectively recovers some or all of the amounts due without requiring additional collection efforts or legal action.

This method serves as a strong incentive for debtors to clear their obligations, as they may be aware that future payments due to them can be reduced or eliminated by the amount of their debt. Managing delinquent accounts in this way is efficient and can help maintain the financial health of the organization while also promoting accountability among debtors.

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To increase funding for new projects

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