Municipal collections can be many agencies’ first foray in collecting for government. This kind of collection can have some particular attributes, some are positive while some are down right challenging. One of the positive attributes Alicia Sundstorm, president of Financial Credit Network, describes is the clients making the necessary documentation a priority.
“Most, if not all of our cities, have no issues at all providing back up documentation to support why someone owes them money,” said Sundstrom. “Typically, the easier to collect are the types of debt the customer signed up for or requested. The more difficult are the fines, like DUI fees, citations and tickets that don’t have something like their driver’s license tied up.”
As with every type of debt collection, there are challenges depending on the type of clients with which an agency works. Sometimes this includes filling the gaps in a client’s infrastructure adjusting to their speed of processing.
“Municipal clients tend to be very limited in staffing resources as well as IT resources,” said Sundstrom. “Collection agencies typically can assist them by making their jobs easier with our IT resources and adequate staffing. Also, patience is what comes to mind. It isn’t always a very fast paced type of client but once established tends to be extremely loyal and a pleasure to work with.”
Among the unique aspects of municipal collections, many aspects are the same. Despite municipal clients generally maintaining all the necessary paperwork and information, the hindrance of a lack of the information will still occasionally rear its head according to Sundstrom. The difficulty of collection is only amplified when a client does not require indentifying information such as a social security number.
When conversing with a consumer the collection agency’s reputation is on the line. The effects of a collection call are especially important when working for a municipal client. Hurting the reputation of a city can leave some lasting damage on the city and the collection agency as well.
“I think the worst thing an agency could do is not be aware of the fact you are collecting from the citizens of any given city,” said Sundstrom. “Customer service and public relations are very important to our municipal clients. You can guarantee failure by mistreating the citizens or by not providing excellent customer service.”
The journey of a thousand miles begins with one single step. So is the philosophy of incorporating municipal accounts into an agency’s portfolio. The key is to eliminate as many unknowns as possible by taking advantage of what the collection professionals do know; the area they are in for example.
“Start with what you know,” said Sundstrom. “Our first city client, Visalia, California, is where our headquarters is located. Beyond that, be prepared to be flexible and provide excellent customer service. It really isn’t that different than any other debt that is owed.”
It is no secret that the CFPB has made great waves and forced many agencies to adjust how and, in many situations, where they do business. However, it appears great change could be on the horizon for municipal collections. New requirements in credit reporting championed by Equifax, Experian, TransUnion and New York Attorney General Eric Schneiderman has a deadline for compliance that is fast approaching.
“We are anticipating changes that will greatly impact our credit reporting privileges due to strict requirements imposed by the National Consumer Assistance Plan,” said Sundstrom. “The National Consumer Assistance Plan prohibits the credit reporting of debt not arising from a contract or other agreement by the consumer to pay such as: traffic and parking tickets, government fines, library fines and ordinance fines to mention a few. The deadline to be compliant is June 2016. All credit reporting bureaus are strictly complying with the expectations of the National Consumer Assistance Plan. This may impact the liquidity of some of the already more difficult to collect portfolios.”
Collecting municipal debt will likely see change in the future but so is the way of most things in life. The main similarities municipal collections will continue to have with others is change and collection professionals preparing for it.