Approaches to Equitable Debt Collection

Approaches to Equitable Debt Collection (CityBase, 2020)

The Unintended Consequences of One-Size-Fits-All Fee Policies

Fines and fees have been seen by some as a tool to balance budgets and by others as an enforcement mechanism. But penalties, surcharges, and collection fees can quickly turn a violation into a crisis.

  • 38% reported committing a crime to help pay down their court debt;
  • 44% took on payday loans — extraordinarily expensive debts that charge triple-digit interest;
  • 83% skipped bills for necessities like rent and car payments — putting them at risk of eviction and car repossession, as well as damaging their credit and driving up interest and penalties.

Leverage Data to Understand Your Constituency

Diversity is the hallmark of any community. The people you serve across the community have diverse circumstances. Adopting public policy can be beneficial to some, yet cause inequities to others.

  • What current approaches are working across your constituency?
  • Just as important, what approaches are not?

Incentivize Compliance Through Greater, More Equitable Access

One way to improve access is by making it easier for people to pay their bills. As we navigate our way through the COVID-19 pandemic, offering safe and convenient payment options is fast becoming a necessity. It’s important to understand that the most convenient payment option will often vary.

Expand Assistance by Partnering with Specialized Third Parties

There are many organizations that can provide assistance, but oftentimes a person will not know such assistance even exists.

Examples from the Field: City Programs That Improve Equitable Debt Collection

Every state, county, city, and community has its own unique challenges and approach. Some local governments are putting their equitable collection policies into practice successfully.

San Francisco Financial Justice Project

In 2016, San Francisco Treasurer José Cisneros started the San Francisco Financial Justice Project, the nation’s first effort embedded in government to assess and reform fines, fees, and financial penalties that disproportionately impact struggling residents.

  • Elimination of administrative fees charged to people exiting jail and the criminal justice system
  • Reduced fees to allow people who are low-income to pay off parking tickets and other citations
  • Lowered costs of tow and boot fees for low-income constituents
  • Creation of an income verification database to make it easier and simpler for departments and the courts to discount fines and fees for people with lower incomes

Chicago Fines and Fees Reform

Earlier we heard some anecdotes from ProPublica’s series on the City of Chicago’s fines and fees complex. Their use of city data was a major part of then-candidate Lori Lightfoot’s equity message, and as soon as she was elected the 56th Mayor of the City of Chicago, she went right to work.

  • Ending doubling of city sticker tickets (city sticker tickets previously doubled from $200 to $400 after late fees)
  • Ending the practice of automatically suspending driver’s licenses for non-moving violations
  • Reinstating the 15-day grace period to renew a city vehicle sticker before issuing a ticket, and the 30-day grace period to purchase a sticker before facing a penalty
  • Stopping the practice of issuing multiple tickets on the same day or consecutive days for vehicle sticker violations
  • City sticker ticket amnesty program (the program is focused on city sticker tickets that would bring people into compliance)
  • Automatic six-month payment plan for all, lower down payments, longer time to pay for those with financial hardships
  • Allowing drivers whose cars have been booted for unpaid fines a 24-hour extension to either pay their fines in full or enter into a payment plan before their car is towed to the pound

Chicago Public Library Fines/Fees Reform

This is a favorite of mine, as it demonstrates how policy can affect residents across an entire city.

Improving Financial Health in Your Community

There are many different ways to protect the financial health of your constituents during these challenging times while still conducting the business that is essential to the fiscal health of your city or county. These cases were a win-win for the city government and it’s constituents. The key is to start looking at your debt collection policies and practices and dig into the consequences of those practices: both positive and negative. You can learn a lot from those insights to better meet your constituents where they are and account for their diverse needs to improve access and equity in your communities.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
CityBase

CityBase

143 Followers

We’re working with innovative public servants to transform the experience of government.