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					                               LEMON GROVE CITY COUNCIL
                                 AGENDA ITEM SUMMARY

Item No.      1.H                                                            Dept. Dir. ________
Mtg. Date     May 20, 2008                                                   City Mgr. ________
Dept.         Finance                                                        City Atty. ________

Item Title:       Request for Proposals for Collection Services

Staff Contact: Betty Hofman, Finance Director and Laura Hubenthal, Admin/Acct Assistant

Recommendation:

 Release and advertise the Request for Proposals (RFP) for Collection Services (Attachment
 B).




Item Summary:
In an effort to recover revenue from individuals and companies, staff presents an RFP for
Collection Services (Attachment B). The staff report (Attachment A) provides a full analysis
of the RFP.




Fiscal Impact:
None at this time. Cost estimates will be detailed during the RFP evaluation process.



Environmental Review:
   Not subject to review                              Negative Declaration
   Categorical Exemption, Section                     Mitigated Negative Declaration

Public Information:
   None                                               Notice to property owners within 300 ft.
   Newsletter article                                 Neighborhood meeting

Attachments:
A. Staff Report
B. Request for Proposals for Collection Services
C. Prospective Collection Firms


                                             -1-
ATTACHMENT A




     -3-
                                 LEMON GROVE CITY COUNCIL
                                      STAFF REPORT

Item No.      1.H

Mtg. Date     May 20, 2008

Item Title:         Request for Proposals for Collection Services

Staff Contact: Betty Hofman, Finance Director and Laura Hubenthal, Admin/Acctg Assistant

Discussion:
Staff has been tasked with recovering revenues from individuals and companies who owe costs
involving DUI incidents, damage to City property, non-sufficient funds (NSF) checks for City
services, and a variety of non-payments. Examples of non-payments include administrative
citations, weed abatement costs and delinquent business licenses. Currently, the City has
approximately $30,000 in uncollected revenues during the past year.
Staff believes the cost recovery process has been inadequate. The current process consists of
mailing invoices and statements to individuals or companies who owe money to the City. Staff
will then attempt to make personal contact. Although staff has followed the appropriate steps in
an attempt to collect these revenues, the collection rate is low.
The following table identifies the balance of uncollected revenues and the rate of collection for
cost recovery accounts for the past year.


                            Amount          Amount            Percent         Delinquent
  Account Type               Billed        Collected         Collected         Balance
     DUI Incidents           22,980.54        4,036.73             17.6%         18,943.81
  Weed Abatement              5,260.00             0.00             0.0%          5,260.00
  Property Damage             5,322.37        1,002.49             18.8%          4,319.88
      NSF Checks                    n/a             n/a               n/a         1,445.00
              TOTAL         $33,562.91       $5,039.22             15.0%        $29,968.69

Due to the low collection rate and the high delinquent balance, staff searched for ways to
improve the collection process to more effectively recover revenue.
Staff’s research determined that other cities have implemented an in-house collections
department with full-time staff. Their staff are able to utilize an intense contact process, small
claims court filings, and report delinquent accounts to credit agencies. In order for the City to
enact an in-house collections department, staff estimates that the operating expenses would
exceed the amount of revenue collected. Therefore, staff believes this option would not be
beneficial to the City.
Staff also learned that some cities have contracted with collection firms to increase collection
rates and reduce staff time on difficult-to-recover accounts. In San Diego County, 14 cities
either contract with or operate their own collection services. Contracting with a collection firm
would require minimal City staff time, no more than the amount currently spent on billing and
collecting. The collection firm would be responsible for collecting, on behalf of the City, only the
delinquent accounts submitted to them. Although fee structures of collection firms vary, staff
estimates the amount collected will significantly exceed program expenses.



                                               -5-
Conclusion:
Staff concludes that the City would benefit from the services of a collection firm. Therefore, a
Request for Proposals (RFP) for Collection Services (Attachment B) is presented for Council
consideration for release.
The RFP outlines the basic services required, the elements required for a response, and an
overview of the evaluation and selection process. The RFP will be advertised on the City’s
website, available for download, and an email will be sent to a list of Prospective Collection
Firms (Attachment C) directing them to the website and eBid board.
Staff recommends the following tentative schedule:
       May 21                       Post RFP and notify prospective firms
       June 19                      Proposals are due
       June 20 – 26                 Review and evaluation of proposals
       June 30 – July 2             Interview most qualified firms (if applicable)
       July 15                      Present recommendation for City Council consideration




                                             -6-
ATTACHMENT B




     -7-
          CITY OF LEMON GROVE




      REQUEST FOR PROPOSALS

                          FOR

          COLLECTION SERVICES


City of Lemon Grove                Proposals are due by 5:00 p.m.
3232 Main Street                         Thursday, June 19, 2008
Lemon Grove, CA 91945
Phone (619) 825-3800                 Document is available on-line at:
FAX      (619) 825-3818          www.ci.lemon-grove.ca.us/contracting




                           -9-
                    CITY OF LEMON GROVE
       REQUEST FOR PROPOSALS FOR COLLECTION SERVICES

I. INTRODUCTION
The City of Lemon Grove (City) invites interested commercial collection firms (Firm) to submit
written proposals to provide collection services.
Lemon Grove is a general law city located 10 miles east of downtown San Diego, California.
Centrally located within the greater San Diego urban area, it affords residents and businesses
easy access to the region’s population and employment centers. The City encompasses
approximately 3.8 square miles and has a population of 25,000.
Lemon Grove provides an extensive array of services including public works, parks and
recreation, planning, economic development, redevelopment, fire and emergency service,
finance, and internal management support functions. The City has a current annual budget of
$13.7 million and 65 full-time employees.
The City contracts with the San Diego County Sheriff’s Department for law enforcement
services. The City does not operate any of its own utilities.

II. DESCRIPTION OF SERVICES REQUESTED

              Annual Estimated Delinquent Accounts for Collection
                                                       Average Amount per
     Account Type          Approximate Number                                   Total Volume
                                                            Account

 DUI Incidents                       70                       $500               $35,000


 City Property Damage                 5                     $2,000               $10,000


 Weed Abatement                       5                     $1,000                 $5,000


 NSF Checks                          20                       $100                 $2,000

 Administrative
                                     30                       $100                 $3,000
 Citations

        TOTALS                      130                       $425               $55,000


CUSTOMER CONTACT
Once an account has been assigned to the Firm, all customer contact, including notices,
mailings, itemizations, small claims, bankruptcy filings, miscellaneous requests, and inquiries, is
the sole responsibility of the Firm. All notices, mailings, collections, etc. shall bear the name,
phone number, and mailing address of the Firm. Customers shall be advised to deal directly
with the Firm.




                                              - 10 -
REQUIRED REPORTING
At a minimum, the Firm shall report the following information:
1. Monthly - An alphabetical listing of all assigned accounts on file with the following
   information:
    a. Name
    b. Assignment Date
    c. Amount Owed
    d. Payment History
    e. Account Status (active, bankruptcy, etc)
2. Quarterly - A summary of Firm activity as follows:
    a. Total number of accounts assigned by month and year-to-date
    b. Average amount
    c. Average age of the accounts
    d. Total number of outstanding accounts by month and year-to-date
    e. Total number of accounts collected in full by month and year-to-date
    f.   The recovery percentage by month and year-to-date

LEGAL PROCEEDINGS
Prior to initiating legal action, the Firm shall inform and discuss the proposed action with the City
in order to obtain authorization.

PUBLIC RELATIONS
The City is a public service agency and as such is concerned with maintaining good public
relations with customers at all times. Accordingly, the selected Firm is required to be sensitive
to customer concerns. The City will investigate all cases where an error appears to have been
made to ensure that the collection action is correct and proper. The City strictly prohibits
questionable collection practices or “strong arm” tactics.

III. PROPOSAL REQUIREMENTS
Proposals should fully address the following issues, with specific and succinct responses:

GENERAL INFORMATION
1. Firm name, address, phone/fax/toll free numbers, email address, principal names/titles
2. Number of years in business
3. Provide a schedule of the days and hours the Firm performs collection activity.
4. List all professional affiliations.
5. Provide an overview of experience and qualifications.
6. Provide at least three (3) references. Include complete contact information.
7. List the government agencies that the Firm currently represents or has represented in the
   past. Include complete contact information and a summary of the collection services
   provided, with the average liquidation of bad debt accounts for each service.



                                               - 11 -
GENERAL INFORMATION (cont’d)
8. Provide the Firm’s overall success rate of collection.
9. Has the Firm, ownership, management or other personnel ever been involved in litigation or
   have had complaints filed for improper collection practices with any State or Federal
   regulatory authority? Please explain.

GENERAL ACCOUNT PROCESSING/HANDLING
1. Describe the proposed collection process, including answers to the following:
   a. How often does a collector review each account?
   b. What is the process and schedule for monitoring accounts by supervisors? How does
      the supervisor evaluate collection quality?
   c. Does the Firm have bilingual personnel to handle calls? If so, what languages?
   d. Do employees sign a statement of compliance with the Fair Debt Collection Practices
      Act (FDCPA)?
   e. At what point and to which credit reporting agencies does the Firm report bad debt?
2. Attach samples of all letters generated to debtors. Indicate which ones, if any, are available
   in other languages.
3. Describe the method(s) and under what circumstances skip-tracing is used.
4. Describe the procedures in place, if any, to handle customer complaints and customer
   service issues.

PAYMENT PROCESSING/HANDLING
Describe the Firm’s process of handling payments and what methods of payment are accepted.

FEES
Attach the Firm’s proposed fee structure.

IV. SUBMITTAL REQUIREMENTS
Prospective Firms must submit three (3) copies of the proposal in a sealed envelope bearing the
caption “Lemon Grove – Collection Services Proposal” to:

               Laura Hubenthal
               City of Lemon Grove
               3232 Main St.
               Lemon Grove, CA 91945

Proposals must be received at the above address by 5:00 p.m. on Thursday, June 19, 2008.
Late proposals will not be considered. All proposals will be retained by the City of Lemon
Grove.
The City reserves the right to reject any proposals, to request additional information, to accept
or negotiate any modification(s), and to waive any irregularities if such would serve the best
interests of the City.




                                              - 12 -
V. EVALUATION AND SELECTION PROCESS
Proposals will be screened by City staff. City staff will conduct interviews of the top candidates
and make recommendations to Council. The screening criteria are as follows:

 1.   Experience and Qualifications
 2.   References
 3.   Experience with Government Agencies
 4.   Processing and Handling
 5.   Fee Structure

SELECTION SCHEDULE
The City intends to proceed with the following tentative schedule:

 June 19, 2008              Proposal Due Date

 June 20 – 26, 2008         Review of Proposals

 June 30 – July 03, 2008    Interviews & Selection

 July 15, 2008              City Council Awards Contract


VI. CONTACT INFORMATION
Firms are encouraged to contact Laura Hubenthal, Administrative Accounting Assistant at
lhubent@ci.lemon-grove.ca.us with any questions. All questions will be answered via email and
sent to all known RFP holders.




                                              - 13 -
ATTACHMENT C




     - 15 -
          Prospective Collection Firms

Company Name                             Location
Absolute Resolutions Corporation         San Diego

Allen's Approval One                     Escondido

Alliance One Receivables Management      San Diego

Alternative Recovery Management          La Mesa

American Agencies - San Diego            San Diego

ARS National Services Inc                Escondido

CA Accounts Service                      El Cajon

CA Recovery Bureau                       San Marcos

Complete Recovery Solutions              Spring Valley

Conrad Credit Corporation                Escondido

Consolidated Recovery Group              Escondido

Continental Central Credit Inc           Carlsbad

Credit Research Bureau                   La Mesa

Credit Solutions Corporation             San Diego

Fallon Agency                            San Diego

Greenflag Profit Recovery (Transworld)   San Diego

Greentree & Associates                   Escondido

Intellicheck Recovery                    Chula Vista

Johnson & Roundtree Premium              Del Mar

Money Control, Inc                       Riverside

Resort Recovery Solutions                San Diego

Road Runner Collection Services          La Jolla

San Diego Credit Association             San Diego

South West Recovery Inc                  El Cajon

Systematic National Collections Inc      Vista

Transworld                               San Diego

West Coast Operations                    San Diego




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