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Date: November 25, 2024 Mon
Time: 8:26 pm
Time: 8:26 pm
Results for private debt collectors
1 results foundAuthor: California Reinvestment Coalition Title: Unholy Alliance: California Courts' Use of Private Debt Collectors Summary: Government-created debt through criminal fines and fees creates financial insecurity and income inequity for already overburdened communities, with a disproportionate impact on low-income communities of color. California has tried several approaches to reform the system of fines and fees, such as ceasing suspension of drivers' licenses as a method of collecting traffic court fines and fees. However, California counties' use of government-contracted third-party private vendor debt collectors is especially troublesome: private debt collectors are not subject to the consumer protection laws, and accumulated debt can spiral out of control for consumers who are unable to pay. A full overhaul of this system is urgently needed to protect low-income communities and communities of color. In an effort to better understand the relationship between state and county courts and private debt collection agencies, the California Reinvestment Coalition (CRC) conducted evaluations of private debt collections agencies that contract with state and county courts to collect data on delinquent court debt. CRC reviewed Master Agreements from the California Judicial Council and Participating Agreements from counties that set the terms between the counties and contracted debt collectors. Data was also collected to evaluate Ability-To-Pay (ATP) programs in 17 California counties. Such programs evaluate each person's ability to pay fines and fees before determining the amount to be paid. Our research showed that the collection of fines and fees is a regressive form of income generation for municipalities. Private debt collectors profit from fines and fees assessed on poor people, facilitated by the state of California. However, the revenue to counties from collecting these fines and fees is miniscule; this system only benefits the private debt collectors. Findings further showed that: - Court-ordered debt collected by private agencies makes up an insignificant amount of a county’s total revenue. It ranges from 0.001-0.46%, meaning none of the studied counties derive even half of a single percent of their revenue from the collection of court-ordered debt by debt collectors. - No court-ordered debt, nor its collection practices, are covered under the Fair Debt Collection Practices Act (FDCPA), a federal law passed in 1977 to protect consumers from unfair debt collection practices. California has its own versionof FDCPA, called the Rosenthal Fair Debt Collection Practices Act (RFDCPA). Like the FDCPA, the RFDCPA does not cover court debt. Some of the debt types not covered by FDCPA and RFDCPA include traffic fines, fees and charges from commitment and probation orders, criminal restitution, or court fine resulting from an arrest. - The process by which debt is collected varies widely by county and by court, creating an uneven system of justice whereby the consequences of court-imposed debt, and the financial burden of repaying it, largely depend on which county court system imposed the fine or fee. - Out of the 17 counties studied, two counties, San Bernardino and Kern, do not contract with private debt collectors. This indicates that it is possible for counties to collect debt without the use of private debt collectors. - Private debt collections agencies make commissions off the debt they collect, ranging from 12%-18% for newly delinquent debt6 to 14.9-25.8% for delinquent debt over five years old. - Of the 17 counties studied, only one private collections agency was subject to a Code of Ethics in their service agreement. - The majority of counties have no public information available regarding their Ability-To-Pay evaluation policies and procedures, making it difficult to evaluate their programs and assess whether they are made available to debtors in an equitable way. Based on these findings, CRC recommendations include the following: County-Level Recommendations: 1) Counties should end contracts with debt collectors. 2) For those counties that do contract with private debt collectors, court-imposed debt collection practices should be subject to debt collection protections outlined in FDCPA and RFDCPA to ensure debt is collected fairly. This debt should not be reported to credit bureaus. 3) Counties should discharge debt before sending it to private debt collectors. Statewide Recommendations: 4) The State of California and County Courts should increase transparency about debt collections practices, contract negotiations for Master Agreements and Participating Agreements, and Ability-to-Pay programs; and institute a public process for communities to give feedback. 5) Delinquent debt should not be transferred to the California Franchise Tax Board. 6) California should create statewide, uniform and accessible Ability-to-Pay evaluations and processes, regardless of type of court. Details: San Francisco, California: California Reinvestment Coalition, 2018. 27p. Source: Internet Resource: Accessed May 22, 2019 at: https://ebclc.org/in-the-news/unholy-alliance-california-courts-use-of-private-debt-collectors/ Year: 2018 Country: United States URL: http://ebclc.org/wp-content/uploads/2018/05/Unholy-Alliance-California-Courts-Use-of-Private-Debt-Collectors.pdf Shelf Number: 156001 Keywords: Criminal Fees Criminal Fines Debt Collection Debtor Prison Monetary Sanctions Private Debt Collectors |