Your city, county, or other local government office may have the right to tax you and other residents as well as charge fees and fines within their jurisdiction. When a person fails to pay their local taxes or racks up fines with the government, they can be subject to a variety of penalties and a debt collector may be assigned to get the amount due from the person.
Examples of city or local government debt can include:
- Unpaid local taxes such as property or business taxes;
- Unpaid fines from speeding, parking or other traffic violations;
- Unpaid fines related to property violations such as failing to comply with trash collection policies; and
- Failing to pay for emergency services such as ambulance transport or local firefighters who responded to a house fire at your residence.
What Kinds of Debt Collection Activities can You Expect from Your City Debt Collector?
- Notice: The first step that most city debt collectors take is to send you notice for the unpaid debt. That notice can take the form of a written letter mailed to your home address or whatever address the agency had on file.
- You may also receive an electronic message if the city or local government has such a service as many agencies offer the ability to pay taxes and fines online with a credit card. Many of the notices will include a late fee or the threat of one if the debt is not paid by a certain time.
- Collection Attempts: If you miss the deadline to pay the debt, the city debt collector will begin to send more letters saying the debt is passed due. They may also call you at home or work demanding that you pay the bill.
- Credit Reporting: Although most city and local agencies do not report an unpaid debt to credit reporting bureaus, some do and others could report you. Reporting this unpaid debt can harm your credit score and make it difficult for you to obtain future lines of credit such as a mortgage, credit card or other loan.
- Selling the Debt to a Third-Party Debt Collector: This strategy is by far the most common. Instead of the city continuing to chase you for unpaid debt, they can sell your debt to a private business.
- In doing so, the private company or third party becomes the owner of the debt and this can frequently increase the intensity of the debt collection activities.
- Wage Garnishment, Liens, and Levies: Either the city or a third party debt collector can obtain a wage garnishment, lien against your property or levy other sources of income and assets if they obtain a judgment and court order to do so.
What Happens When You Do Not Pay the City Debt?
If you fail to pay the debt, your credit score could suffer if it is reported and your wages and assets may be taken. Wage garnishment and bank levies can take away your cash leaving you unable to pay your other debts and necessities.
What Can You Do to Stop City Debt Collectors?
Paying any taxes, fines or fees on time is the best way to prevent any negative debt collection activity. However, if you cannot pay, ask about possible payment plans. Many cities and third party debt collectors have affordable payment plans that spread the amount of the debt out over time so that you can make smaller, monthly payments rather than the full amount owed at one time.
Entering a payment plan and continuing payments can stop other negative debt collection such as negative credit reporting, liens, and garnishment activities. If you do not want to make monthly payments, some debt collectors may accept a lump sum amount that is less than the original debt owed if you have some economic hardship and the debt is old.
How Can You Appeal a City or Local Government Debt?
If you believe the amount due is inaccurate, was already paid or otherwise not applicable to you, you may be able to appeal. However, appeals usually require a timely notice to appeal shortly after receiving notice of the fine, tax or other amount due. Check your notice if there is a process for appeal. You may also contact the locality responsible for the bill to see what appeal options exist.
What is the Fair Debt Collection Practices Act and Does it Apply to City Debt Collectors?
The Fair Debt Collection Practices Act protects consumers from unfair debt collection practices of third party debt collectors. If the city or another government agency is collecting the debt, this act does not apply.
However, if the debt was sold to a third party debt collector, it should apply. The act prohibits harassment, threats, abusive or otherwise unfair tactics to collect the debt. If you believe a debt collector has violated the act, you can report the behavior to the Federal Trade Commission. Some states, such as California, have their own fair debt collection laws that do apply to governments.
Should I Consult a Lawyer for Issues with City Debt?
A debt lawyer can explain your rights and your responsibilities for a city debt collection case. They may also represent you with any debt collector. Having a lawyer negotiate on your behalf can offer piece of mind and help resolve the debt issue to your advantage.