Section 765.406 - Release of transferor from liability(a)General. Agency approval of an assumption does not automatically release the transferor from liability.(b)Requirements for release.(1) The Agency may release the transferor from liability when all of the security is transferred and the total outstanding debt is assumed.(2) If an outstanding debt balance will remain and only part of the transferor's Agency security is transferred, the written request for release of liability will not be approved, unless the deficiency is otherwise resolved to the Agency's satisfaction.(3) If an outstanding balance will remain and all of the transferor's security has been transferred, the transferor may pay the remaining balance or request debt settlement in accordance with part 761 subpart F of this chapter. If the transferor does not resolve the debt by paying the remaining balance or submitting a debt settlement offer that is acceptable to the Agency, the Agency will service the debt in accordance with part 3 of this title using all applicable collection tools including, but not limited to, administrative offset, AWG, cross-servicing, Federal salary offset, and TOP.(4) Except for loans in default being serviced under 7 CFR part 766, if an individual who is jointly liable for repayment of an FLP loan withdraws from the farming operation and conveys all of their interest in the security to the remaining borrower, the withdrawing party may be released from liability under the following conditions:(i) A divorce decree or property settlement states that the withdrawing party is no longer responsible for repaying the loan;(ii) All of the withdrawing party's interests in the security are conveyed to the persons with whom the loan will be continued; and(iii) The persons with whom the loan will be continued can demonstrate the ability to repay all of the existing and proposed debt obligations. 72 FR 63309 , Nov. 8, 2007, as amended at 85 FR 36693 , June 17, 2020