The state of Louisiana is considering moving ahead with a pilot program that would see older delinquent debts sold into the ARM market.
As noted by the Associated Press, Louisiana’s legislature passed a provision this year that would allow for the creation of a two-year pilot program designed to test the effectiveness of selling debt to private companies.
At the end of 2011, Louisiana state agencies counted more than $750 million in debts that were older than 180 days, with $20 million slated to be written off as uncollectable.
Another idea being floated is setting up a centralized collection agency run by the state. Currently, Louisiana’s office of the attorney general helps some state agencies recover outstanding debt. But relationships and contracts between agencies and the AG’s office are on a case by case basis.
One option not mentioned in the article was outsourcing the accounts to private collection agencies.
Some municipalities in Louisiana do use private collection agencies. In fact, an effort to curtail the process failed this year in the state legislature. But it appears that at the state level, Louisiana is considering only selling the debt or working it internally through a government-run collection agency.