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Home My WebLink About12 Collection Process Agenda Item 2 TRUCKEE Public Utility D'Istnct .,+l Yk WORK HOP To: Board of Directors From: Robert Mescher Date: January 04, 2012 Subject: Discussion Regarding the District's Collection Process 1. WHY THIS MATTER IS BEFORE THE BOARD The Board requested staff to investigate options to increase collection efforts of delinquent accounts. 2. HISTORY When staff presented the semiannual write-off of delinquent accounts at the Board Meeting on September 7, 2011 , the Board requested staff to investigate potential ways to increase collection efforts and reduce the District's bad debt expense. 3. NEW INFORMATION Collection methods are not specified in District code. The normal collection process involves numerous attempts to contact the debtor and negotiate payments. The progressive actions are: • Original bill is mailed; • Notice to pay the past due amount within 15 days is mailed with the next month's bill; • Notice to pay the past due amount within 48 hours is posted on the customers front door or is relayed via an automated telephone call; • Service is disconnected; • Account is closed; • Transworld Systems' Phase 1 - five written notices sent every ten days (Attachment 1 is a sample Phase 1 letter); • Transworld Systems' Phase 2 - trained collection agents attempt collection; and lastly • Transworld Systems' Phase 3 - demand letter and calls from attorney; account is graded: High balance and good credit; possible lawsuit, or Medium balance and fair credit; possible payment plan, or Low balance and poor credit; minimal collection efforts. Attachment 2 is a timeline of the process to collect the District's delinquent accounts. Transworld charges $9.50 per account for Phase 1 and 50% of the collected amount for Phase 2 and 3. In addition to the above process, the District's customer service software retains uncollected balances and information regarding the customers, sole proprietors and business owners so that the unpaid balances can be collected before those individuals open new accounts. Also, Robert Mescher recently authorized Transworld Systems to negotiate payment agreements and to sometimes accept reduced total payments for certain delinquent accounts that have been unsuccessfully collected using the traditional methods. Staff identified additional ways to- improve collection results: • Run credit verification on all customers and require a deposit if a customer's credit is unsatisfactory, even if the individual is a homeowner. (This would require a modification to District Code); • Obtain and enter required collection data upon creating a new customer account so that a delinquent account can be semi-automatically transferred to Transworld Phase 1; • After 30 days from the account closing, ensure it is promptly transferred to Transworld Phase 1; • Alternate between written Phase 1 letters and automated telephone calls, rather than sending only written notices; • After Phase 1, ensure the account is promptly transferred to Phase 2; • Proactively interface with Transworld representatives to collect delinquent accounts over $1,000; and • Report an uncollected account to credit bureaus if the account is uncollected 6 months after the account is closed. 4. FISCAL IMPACT There is no direct fiscal impact associated with this workshop. 5. RECOMMENDATION Receive this report and provide comments. Robert Mescher Michael D. Holley Administrative Services Manager General Manager W G8BTWL93 60L012 2UC52OGJ012*TWL* Tran 01 Arm% ATTACHMENT 1 sworl d low 2235 Mercury Way, Suite 275, Santa Rosa, CA 95407 (888) 446 4733 . . .REGIONAL OFFICE. . . 2235 M ERCU RY WAY,#275, SANTA ROSA, CA 95407 TEL. 707-236-3910 CD 00 J U N E 15, 20.11 I11111111111111111111llllllllllllllllllllaiilllllllllllllll�l SAMPLE CLIENT JAMES Q. DEBTOR ACCT NO.: 2859T-600742415 1234 STREETNAME CLIENT REF.:3023616AP15649 SANTA ROSA, CA 95407 UNITED STATES AMOUNT DUE $77.28 James Q. Debtor IMPORTANT--The 30-day FDCPA dispute period commenced when you received our first letter. Our client still shows an unpaid account in the above stated amount appearing due and owing by you. TSI is a nationwide collection agency authorized to pursue collection of this debt. You may make continued collection efforts unnecessary by resolving this matter. Our demand for payment does not affect your right to dispute this debt as described in our first letter. Please mail your payment, along with this letter for proper identification,to our client's address below. Send correspondence, other than payments, to this collection agency at P.O. BOX 12103,Trenton, NJ 08650. i SAMPLE CLIENT Our Client's Phone: 123 MAIN STREET 800-111-2222 X 1240 SANTA ROSA, CA 95407 2 Please mail your payment or pay online at www.clienturl.com Transworld Systems Inc. is a collection agency attempting to collect a debt and any information obtained will be used for that purpose. This communication is from a debt collector. We are required under some states'laws to notify consumers of certain rights as detailed in the list on the back of this notice. Consumers have rights under state and federal law that are not described in this letter or in the list on the back of this notice. SAN FRANCISCO,LOS ANGELES,NEW YORK,CHICAGO,DALLAS,PHILADELPHIA,DENVER,SEATTLE,PHOENIX,HONOLULU,ATLANTA,BOSTON,MIAMI AND OTHER MAJOR CITIES t PROFESSIONALCOLLECTION AGENCY FULL COLLECTORS SERVICE ATTACHMENT 2 0 This is the normal bill of the prior month's consumption. o 0 Payment is due 19 days from the printing date of the bill. No V• A 15-day notice showingpast due amount is mailed with the C P CO next months� bill.. A 48-hour notice is given if no payment is received within the / Q m last 15-day period. W s �� YP . Q m Service is disconnected for non-payment. v, a '�'�� Q o • O If it is still unpaid, the account is involuntarily closed one week �cS'cn 0 . � � z after the service was disconnected.An account may also be N 0 z closed voluntarily due to the relocation of the customer. Q � � m 0 os �' DO A month) statement is mailed showing the past due amount. 0 ��• Y g P --4 ' �� '� • 9 c o � 00 30 days after the account was closed, it is transferred to S fj r Transworld S stems' Phase 1. Past due notices are mailed CO y N co (7 once every 10 days by Transworld. A second notice is mailed by .Transworld o - 1 r A third notice is mailed by Transworld. oo A fourth notice is mailed by Transworld. Q o A A fifth notice is mailed by Transworld. oN If no payment is received after 5 written notices were mailed, _L then the account is transferred to Transworld's Phase 2. - - Specially trained and certified Transworld collection agents o research public records to locate the debtor,verify the debtor's credit history, and identify the assets.The collectors will o personally attempt to contact the debtor by telephone and by � written notice. o ,Q o �S r � r If the Transworld collector is unsuccessful after a reasonable 1 m effort, then it is transferred to Transworld's Phase 3. All CD accounts receive demand letters from an attorney. The quality of the account is graded: A) High balance and good O credit, attorney telephones debtor and files a lawsuit if z appropriate; B) Medium balance and fair credit, attorney o telephones debtor and attempts to establish a payment plan if t A - t possible C} Low balance and poor credit, attorney telephones V debtor, but account is returned to TDPUD if uncollected. �cS' M Z M