A recipient claim is an amount owed because of benefits that are: Overpaid; or Trafficked. The local department shall establish and collect a claim in accordance with this regulation and Regulation .55 of this chapter, regardless of whether the local department meets the timeframe described in §I(1) of this regulation. The following individuals are responsible for paying a claim: Any individual who was an adult member of the household when the overpayment or trafficking occurred; A sponsor of an immigrant household member if the sponsor was at fault; or An individual connected to the household, such as an authorized representative, who actually trafficked or otherwise caused an overpayment. The local department shall establish a claim against a household that has received more Program benefits than it was entitled to receive, except when the overissuance occurred because the: Local department failed to ensure that the household: Signed the application form, Completed a current work registration form, or Was certified in the correct local department area; or Local department discovered the administrative error or inadvertent household error that caused the overissuance more than 12 months after the month of the occurrence. The local department shall categorize claims as an: Administrative error (AE); Inadvertent household error (IHE); or Intentional program violation (IPV). Beginning with the date of the discovery of the overissuance, the local department shall include in its calculation of the amount of overissuance any issuance for the: 12 preceding months, in the case of an AE or an IHE; and 6 preceding years, in the case of an IPV. Calculating the Amount of a Claim not Related to Trafficking. The local department shall determine the correct allotment that the household was entitled to receive in each month in the periods described in §E of this regulation. The overissued amount is the difference between the allotment the household received and the amount it would have received if information had been known and acted on in a timely manner. The earned income deduction as set forth in Regulation .32 of this chapter is not applied when determining an overissuance due to the failure of a household to report earned income in a timely manner. The first month of the overissuance: Is the month: In which the change in allotment would have been effective had it been reported; or The local department should have effected a change in the allotment had it acted in a timely manner; and May not be later than 2 months from the month in which the change in household circumstances occurred. Trafficking Related Claims. A claim arising from a trafficking related offense is the value of the trafficked benefit as determined by: The individual's admission; Adjudication; or The documentation that forms the basis for the trafficking determination. The local department: Shall establish a claim before the last day of the quarter following the quarter in which the: Overpayment was discovered; or Trafficking incident was determined as described in §G of this regulation; and Need not establish a claim if the claim referral is $125 or less, unless: The household is currently participating in the Program; or The claim was established in a quality control review. Claim Processing. The local department shall initiate collection on all established claims unless the claim is collected through an offset of benefits not yet restored as required in Regulation .53 of this chapter. The local department shall initiate collection action by sending a demand letter to the household which contains language stating: The amount owed; The reason for the claim; The period the claim covers; Any offsetting that was done to reduce the claim; The methods available to the household for repaying the claim; The household's right to a fair hearing, if the household disagrees with the amount of the claim; Notice of the availability of free legal representation; The length of time the household has to respond to the letter by returning the signed copy; That allotment reduction shall be initiated if a participating household fails to make restitution, and the methods to be used in allotment reduction; That the local department may reduce the claim if the local department believes the household is not able to repay the claim; That if the claim is not paid, the local department may: Send the claim to other collection agencies; or Refer the claim to the federal government for federal collection action; How the claim was calculated; and That if the claim becomes delinquent as described in Regulation .55E of this chapter, the household may be subject to additional claim processing fees. Repayment Agreements. A repayment agreement for a claim shall: Include due dates for repayment or time frames for the submission of payments; and Specify that the household will be subject to involuntary collection action if the payment is not received by the due date and the claim becomes delinquent as described in Regulation .55E of this chapter.