January 2006
Cities unleash collection agencies on those with unpaid library fines
Think twice before you stuff those late library-book notices in your sock drawer. To help boost dwindling revenues, an increasing number of state, city, and municipal governments are hiring private collection agencies to go after consumers with unpaid public debts such as court fees, library fines, moving violations, and parking tickets. Consumers owe local governments nationwide an estimated $40 billion or so in unpaid debts, according to the National Association of Counties. Several cities, among them Anchorage, Alaska; Chattanooga, Tennessee; Miami, Florida; and Pima County, Arizona, have hired collection agencies to recoup the money they are owed.
If instructed to do so by their clients, collection companies report your unpaid fines to credit bureaus--Equifax, Experian, TransUnion, and others--without warning you first. Those small debts you've ignored could wind up damaging your credit rating and costing you more in interest on your next mortgage or car loan. Worse, collection companies typically add a fee on to your debt, which could boost the amount you owe, including any late fees you've incurred, by another 20 percent to 30 percent.
Collection companies seeking payment on nongovernment debts, such as car loans, credit cards, or medical bills, must follow the rules outlined in the Fair Debt Collection Practices Act (FDCPA). They prohibit collection agencies from harassing you, threatening to harm you, making false or misleading statements, or giving false credit information to anyone about you, including a credit bureau. If a collection agency violates the law, you have the right to sue it for damages.
However, in the opinion of attorneys at the Federal Trade Commission, the federal agency charged with enforcing the FDCPA, the law does not appear to cover the collection of delinquent fines, such as library fees or parking tickets. Some state and local laws might cover collection of such fines. If you are concerned, phone the office of your state attorney general for more information. And if you're having a problem with a collector, complain to the agency that hired him.
The bottom line: Pay your fines promptly. If you are disputing a charge, monitor your credit reports to make sure no smirches appear on them.
Think twice before you stuff those late library-book notices in your sock drawer. To help boost dwindling revenues, an increasing number of state, city, and municipal governments are hiring private collection agencies to go after consumers with unpaid public debts such as court fees, library fines, moving violations, and parking tickets. Consumers owe local governments nationwide an estimated $40 billion or so in unpaid debts, according to the National Association of Counties. Several cities, among them Anchorage, Alaska; Chattanooga, Tennessee; Miami, Florida; and Pima County, Arizona, have hired collection agencies to recoup the money they are owed.
If instructed to do so by their clients, collection companies report your unpaid fines to credit bureaus--Equifax, Experian, TransUnion, and others--without warning you first. Those small debts you've ignored could wind up damaging your credit rating and costing you more in interest on your next mortgage or car loan. Worse, collection companies typically add a fee on to your debt, which could boost the amount you owe, including any late fees you've incurred, by another 20 percent to 30 percent.
Collection companies seeking payment on nongovernment debts, such as car loans, credit cards, or medical bills, must follow the rules outlined in the Fair Debt Collection Practices Act (FDCPA). They prohibit collection agencies from harassing you, threatening to harm you, making false or misleading statements, or giving false credit information to anyone about you, including a credit bureau. If a collection agency violates the law, you have the right to sue it for damages.
However, in the opinion of attorneys at the Federal Trade Commission, the federal agency charged with enforcing the FDCPA, the law does not appear to cover the collection of delinquent fines, such as library fees or parking tickets. Some state and local laws might cover collection of such fines. If you are concerned, phone the office of your state attorney general for more information. And if you're having a problem with a collector, complain to the agency that hired him.
The bottom line: Pay your fines promptly. If you are disputing a charge, monitor your credit reports to make sure no smirches appear on them.
