County has Success with In-house Collections; Still Using Agency for Help

A county in Texas is finding success after moving a portion of its collection process in-house, but according to the collection agency that works on their contract the accounts have not stopped coming.

According to a story in a local newspaper The Daily Sentinel, Nacogdoches County moved much of its court fines and fees collection program to an office that was set up in April of this year. Since then, the paper reports, more than $500,000 has been collected. A county spokesperson said it is receiving the money faster than when it used a collection agency to go after the same dollars.

The Texas state legislature in 2005 mandated that municipalities with populations over 50,000 create an office to deal with collections within the judicial system.

But the collection agency that works with Nacogdoches says it has not seen a drop-off in the number of cases referred by the county. Bruce Cummings, chief marketing officer at Municipal Services Bureau, said that the mandate allows municipalities to outsource to a collection agency after they have “exhausted all in-house collection efforts.” Nacogdoches opts for sending accounts to MSB accounts that are 60 days or more past due.

Cummings said that the new mandate has improved the accounts they receive for collection. “The case-load is in better order now,” he said. “A lot of the contact information scrubbing has already taken place, for example.”

Cummings also noted that the new rule in Texas has not dampened demand among municipalities for outsourcing the collection function. “We’re seeing less resistance to outsourcing now,” said Cummings. “Many cities and counties are realizing private companies can collect more efficiently due to expertise and no outlay of capital.”

A recently released research report on the ARM industry, The Kaulkin Report 7th Edition, noted that municipalities in the U.S. bring in a staggering $1.25 trillion in revenue every year. It is estimated that $40 billion in delinquent debt is owed to local governments, indicating further potential for public-private partnerships for the collection of debt.

Public sector entities in the third quarter sought bids on outsourced collections contracts on portfolios worth $1.12 billion, according to The Public Eye, a newsletter published by Net Gain Marketing that follows the government collections market.