The following are recoupment scenarios:

• Funds disbursed to applicants who are later determined to be ineligible;
• Funds disbursed to applicants who subsequently withdraw from the program;
• Funds disbursed to applicants who fail to comply with the full scope of work or cannot validate the proper use of all grant funds;
• Funds disbursed to applicants, but subsequently an applicant receives additional funding from insurance proceeds, FEMA funds, or other payments determined to be a duplication of benefits (“DOB”) under federal requirements;
• Funds disbursed to applicants who were later subjected to foreclosure, death, or bankruptcy; and
• Funds disbursed to applicants, but a final grant reconciliation review determined that the eligible project costs were less than the grant award disbursed.

Applicants who are required to return CDBG-DR funds may pay immediately in full upon receipt of a recoupment notification. However, if an applicant is unable to immediately repay the full balance, DCA offers a repayment plan under the following terms:

• A repayment period of up to thirty-six (36) months.
• The balance owed will be evenly distributed across the repayment period.
• No interest or fees.

In the event an applicant fails to comply with the repayment schedule, after multiple attempts of contact, DCA may transfer collection efforts to the New Jersey Department of Treasury, Division of Revenue and Enterprise Services (DORES) for further collection efforts at 91 days. DORES may employ methods such as wage garnishment, tax refund offsets, and other legally authorized collection actions to recover the outstanding funds.

DCA will not pursue recoupment for applicants who are deceased, property lost to foreclosure, or debts successfully discharged through bankruptcy.

Deceased Applicants

Outstanding balances for deceased applicants will be forgiven upon receipt of supporting documentation, such as a death certificate. If the disaster recovery program application included two applicants and one is deceased, the remaining balance may still be considered for forgiveness. However, if the deceased individual was not an official applicant (e.g., a spouse not listed on the application), automatic forgiveness will not apply.

Bankruptcy

Applicants who have been notified of an outstanding balance and who have filed for bankruptcy will be granted full forgiveness even if DCA or the disaster recovery program is not explicitly listed in the bankruptcy documentation. If a bankruptcy case is still pending, account collections can be paused upon receipt of court documentation confirming a scheduled hearing.

Verification Process

Applicants or their representatives are encouraged to share any relevant information to ensure accurate processing. DCA may utilize third-party tools to verify bankruptcy or other relevant legal circumstances.

DCA will not pursue recapture of funds for low- to moderate-income (LMI) applicants that have completed projects, but received additional duplicative federal assistance such as FEMA Individual Assistance, Increased Cost of Compliance (ICC) coverage, or Small Business Administration (SBA) loans, after initial funding. This exemption is capped at $27,000.

Applicants who were not qualified as LMI at the time of award, but who have had a change in financial circumstances since grant signing and want to apply for this exception can apply for exemption. To do so, applicants must provide documentation demonstrating their household income is at or below 80 percent of the Area Median Income for their county. Details related to this process will be published on the Division of Disaster Recovery and Mitigation’s webpages prior to the implementation of collection efforts.

To determine if your household is at or below 80 percent of Area Median Income, please refer to the information on the HUD website: https://www.huduser.gov/portal/datasets/il.html. 

Once the debt has been fully paid, determined uncollectible by DORES, or forgiven based on the exception criteria, DCA will contact the county clerk to remove the restrictive land covenant and notify the applicant their account is closed.

Applicants involved in fraud or under court-ordered restitution must repay funds and are not eligible for the repayment plan or exceptions. Also, applicants already under a repayment plan that was established prior to the execution of this policy are required to adhere to the terms of that repayment plan unless notified otherwise.