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Exploring Collection Options for Cities, Counties, and State Government Debt

Local government debts are difficult to collect. In addition to complying with various statutes, some local governments simply do not have all the tools or resources they need to collect. Local revenue managers have no easy task to figure out what options they have to pursue delinquent accounts. So what can a local city or town do? Here are some collection options for city and town revenue managers.

Work with State Collectors
Many states have now developed cooperative processes and systems at the State Government level that local cities and counties can tap into for the collection of various debt types. States such as Rhode Island, Maryland, and Louisiana have developed statewide or state-level Offices of Debt Recovery (ODRs) to which localities can send various delinquent debts.

One advantage of this is the additional tools. Statewide agencies can tap into call centers and technologies that the local agencies do not have. Many of the states have data sharing agreements with other political state subdivisions that will help a local city or county to find new home address or employment information on a delinquent account holder after they have left the area (skip tracing tools).

In the state of Louisiana for example, the State Legislature passed a bill in 2013 (Act 399) that created an Office of Debt Recovery (ODR). The legislation mandated that certain debt types from local cities and towns be placed with the ODR, and others are the decision of local cities and county (parish) government offices. It also gave the ODR permission to treat nearly all debt as a tax assessment; meaning if a citizen or business was to receive a state tax return, the bill would be paid as an offset taken from the tax return. The ODR also purchased and leveraged a variety of collection tools including a centralized call center with trained collection agents, along with many of the modern technology currently used in the collection industry. The legislation also permitted certain debt types to trigger a hold on the renewing of driver’s licenses, hunting and fishing licenses, business licenses, etc. until the debt is paid. These tools dramatically increase the number of debtors who then pay the bill instead of ignoring it.

Louisiana established a centralized database for various state agencies to data share and enhance collect efforts. Along with many other states, Louisiana creates agreements between the State Attorney General’s Office for some debt types to have debts pursued through legal action.

Federal Program
Eight states participate in what is known as the Federal & State Vendor Payment Offset program: Kentucky, Louisiana, Maryland, Minnesota, New Jersey, New York, West Virginia and Wisconsin. There are reciprocal agreements for data sharing, some offsets are conducted by the U.S. Treasury including both tax and non-tax debt.

These ODRs provide many benefits to local governments including:

  • Automated and enhanced workflow
  • Payment agreement self-service and monitoring
  • Enhanced management reporting
  • System initiated judgments, bank levies, and wage garnishments
  • Processes for all the debt types that will be worked
  • Enhanced dunning notices; more often, at the right time, to the right person
  • Automated gathering of addresses and phone numbers
  • Automated data gathering from multiple agencies
  • Higher volumes to drive better rates and outcomes from outside Collection Agencies with whom the state contracts

In most of these arrangements, there is a mandated or agreed upon contingency fee that the ODR keeps from all collections to offset operational costs. Fees are typically around 25%.

Private Collection
Of course, despite all the tools available to state, municipal, and county governments, there is often the need to partner with a quality and professional private collection agency that will increase recoveries while maintaining your reputation in the community. Here at PRC, we are partnered with many state agencies, including offices of debt recovery, which place debts with us on behalf of various cities, towns, and counties.

At PRC, we have partnered with state and local government agencies for more than 20 years, collecting on a variety of debt types ranging from tax, court fines and fees, EMS, utilities, student loans, institutional debt, installment loans, vehicular class debt, and others. In those 20 years, PRC has never been found guilty of regulatory violations. We provide the very best in performance, compliance, client relations as well as care for your citizens, constituents, and taxpayers.

Get Help with Delinquent Accounts
Do you have some debt types that have been aging? Do you have debts that you simply do not have the staff and resources to pursue that could be contributing to your bottom-line total revenue? Do you need a professional, effective and better way to increase revenue for the government office or utility you help manage? Contact us today and see how we may be able to help.