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Few Winners When Courts Privatize the Collection of Public Debts

"These things can sort of spiral out of control."

People line up outside the Metropolitan Courthouse, which handles traffic citations and other matters, in downtown Los Angeles. (AP Photo/Damian Dovarganes)

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Every Wednesday morning, the East Bay Community Law Center runs a walk-in clinic out of its office in Berkeley, Calif.

The clinic is run by the Center’s Clean Slate Practice, which focuses on “the decriminalization of poverty,” according to Brandon Greene, one of its lead attorneys. Some of Greene’s colleagues do post-conviction work, helping to seal arrest records, reduce probation, and help people who’ve been denied employment because of criminal backgrounds. But Greene’s clients are facing a particular set of issues: court-ordered debt related to things like traffic violations and parking tickets.

“For the average person, they think that a parking ticket isn’t really expensive,” says Greene. “But if you don’t pay your parking ticket or can’t afford to pay your parking ticket, eventually that ends up going to the Franchise Tax Board, which is the state agency that can garnish your wages … These things can sort of spiral out of control, particularly for folks who are housing insecure and get a lot of tickets on their vehicles.”

On top of that, courts often outsource debt collection to private agencies, which operate on contracts negotiated county-by-county, and take varying rates of commission on delinquent debt. Clients are often confused about who exactly they’re supposed to pay and when. Greene says he’s had clients with more than $10,000 worth of traffic-related debts, “because they ratchet up so quickly.” He’s also represented clients who’ve had their wages over-garnished by more than $1,000 because of administrative errors.

“If anything short-circuits along that way or people aren’t communicating adequately, people can find themselves in very precarious positions,” Greene says.

Last week, the California Reinvestment Coalition released a study of issues related to court-ordered debt and called on California courts to end their reliance on private contractors — or at least to open up the contract negotiations for public review. The report, called “Unholy Alliance: California Courts’ Use of Private Debt Collectors,” shows that private debt collection practices vary from place to place, disproportionately harm low-income communities and communities of color, and generate vanishingly little revenue for counties.

The coalition report also calls for discharging delinquent debts, bringing collection practices in line with federal regulations that apply to other types of debt, and creating a uniform system of ability-to-pay evaluation that will apply across the state.

“We want to make sure that all types of debt are being collected fairly, if they need to be collected at all,” says Paulina Maqueda Escamilla, a researcher at the California Reinvestment Coalition and graduate student at UC Berkeley Goldman School of Public Policy, who led the research for the report.

“Ideally, all debt would be swept away,” added Nehama Rogozen, the group’s strategic communications manager. “But we know that that’s not something that is necessarily possible, right now, everywhere.”

The report focused on 17 counties in California where adults of color accounted for a greater share of the population than in the state as a whole. Of those, the report found, 15 counties contract with private companies to collect fines, forfeitures, and penalties. Practices that contractors are required to follow vary from county to county, but in no case does the amount of debt collected by private agencies equal as much as half a percent of a county’s total revenue. (Though in some cases the actual dollar amount can be quite large; private collectors in Los Angeles County bring in nearly $70 million a year, according to the report.)

Counties’ contracts with private debt collectors be subject to the federal Fair Debt Collections Practices Act, the report recommends. The act prevents certain abusive practices for collecting on student loan debt, credit card debt, and other types of debt. It also recommends creating “statewide, uniform and accessible ability-to-pay evaluations and processes, regardless of type of court.” Ability-to-pay evaluations take into account each person’s ability to pay fines and fees before determining the amount to be paid.

The report also recommends discharging all delinquent debt after five years, which the California Reinvestment Coalition says would not only benefit debtors who are unable to pay but also be good for counties that spend money trying to collect debt that’s unlikely to be repaid.

“Nobody wants to not pay their debts,” says Maqueda Escamilla. “I think that that is one of the biggest sticking points that I’ve heard in some opposing views about why debt should be collected: ‘If you do the crime you should pay the fine.’ … But this isn’t about that. It’s about my ability to actually have the funds to be able to pay that right now.”

It’s also noted in the report that certain contracts between the state of California and private collection agencies, which guide counties’ participation in private collection programs, are set to expire at the end of the year. The California Reinvestment Coalition says that it filed right-to-know requests with the state for information about ongoing contract negotiations with those agencies, but they were rejected because negotiations were incomplete. If counties aren’t going to end their partnerships with private debt collectors, which the coaltion believes to be inherently less accountable than governments, then there should at least be a push for more transparency in the negotiating process, the coalition says.

Legal fees for poor defendants can quickly spiral out of control in many cases, as Next City has reported previously. Maqueda Escamilla points to potential progress in San Francisco, where the city’s legislative body is considering an ordinance that would eliminate certain fees related to convictions. And she notes that a state bill that’s currently under consideration would expand some protections that currently apply to consumer debt so that they would also regulate court-ordered debt. But the ultimate goal for the California Reinvestment Coalition and many of the groups that contributed to its report remains ending private collection of court-ordered debt altogether.

“It just creates layers of bureaucracy and confusion,” says Brandon Greene. “There’s also a moral question, in terms of how we are setting up private profiteers to profit mostly off the backs of indigent, minority folks.”

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Jared Brey is Next City's housing correspondent, based in Philadelphia. He is a former staff writer at Philadelphia magazine and PlanPhilly, and his work has appeared in Columbia Journalism Review, Landscape Architecture Magazine, U.S. News & World Report, Philadelphia Weekly, and other publications.

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Tags: prisonsbankruptcyprivatization

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