California Needs $7.5 billion in Court-Ordered Debt to be Collected
The state of California has about $7.5 billion in court-ordered fines and fees sitting around just waiting to be collected, according to an article from investigative journalism group California Watch.
The debt is owed to California for various fees, fines, and penalties imposed by courts for everything from traffic violations to criminal offenses. The state’s court system is currently exploring options for collecting the money.
But by law, the job of collecting court-ordered debt falls to individual counties. The counties have latitude to decide how to approach debt collection. One county, Shasta, is so aggressive it handles the debt collection for five other nearby counties. And some use private collection agencies to pursue the debtors.
The piece noted that an attorney representing private collectors had brought up that possibility at the last meeting of the Judicial Council, the policymaking group for California state courts, as he implored the Council to create incentives for counties to deal with their debt collection issues.
Consumer advocates argue that much of the debt is probably uncollectible and should be written off. But California Watch said that their analysis of the court system’s debt data shows that the total has increased by $2 billion since the 2008-09 fiscal year, meaning much of the debt is not old.
The story presents an opportunity for ARM firms specializing in government debt collection. Because each county deals with its debt collection individually, a strong business development plan could reap rewards in the Golden State.
Read the full piece on the California Watch web site.
Related: For more information on government debt collection, check out insideARM.com’s Local, State, and Federal Government Debt Collection Report.
I know from my work with some of the counties in California that they are aggressively trying to change this scenario. It may be an “opportunity” for the ARM industry but its also an opportunity for the counties and internal government collection organizations to modernize some of their processes and training and provide a high level of service to the citizens
It is certainly a different environment but as I have worked with these folks I realize more and more that the individuals at the counties bring to a great deal of professionalism and the desire to the table. These counties don’t need collection vendors they need partners.
Great Article! Just the tip of the iceberg when it comes to what is owed to the states.
I had to chuckle when I read that there is $7.5 billion “just waiting to be collected”. That amount may well be outstanding, and it would do wonders for local governments if it was all paid promptly. However, it all depends on the types of fines and who owes them. A recent conversation with AR officials of a mid-sized city near me revealed that they are annoyed with their police department which is making noise about law and order by issuing scads of public drinking and similar nuisance violation fines to homeless people. Looks good on the chief’s books but these fines are worthless. If someone does track down the offender how will s/he pay – bottle returns? And then the council turns on the AR department and asks why they, or their agency, is not collecting such a significant amount?
A little common sense and forethought would save local and state governments a great deal of time and money.
>>Consumer advocates argue that much of the debt is probably uncollectible and should be written off
As all of us collectors already know, a write off is an accounting procedure and doesn’t mean that the debt isn’t owed. And also, I don’t understand how you can determine if an account is uncollectible without actually looking at the account to make that determination. Is there some new California law that I don’t know about which puts a statute of limitations on government-issued fines?
>>I had to chuckle when I read that there is $7.5 billion “just waiting to be collected”
Debt purchasers have dealt with the exact same thing for years. Some of the people who haven’t paid their accounts in years are in jail, deceased, or are just plain completely broke. So yeah, you collect only a percentage of the face value, and the workers doing the collecting might have to deal with some bad people. But it’s still worth SOMETHING, so California would be wise in its time of crisis to make the most of the situation and do something rather than get nothing. Even a small return on would still be a nice chunk of change for its counties.