With $300K in Unpaid Bills, Powder Springs Eyes Collection Agency

Powder Springs officials are considering contracting with a collection agency to help cut down on the $300,000 owed to the city in water and sewer bills, and prevent such a backlog from growing again.

The city—which provides for those in the city limits and some just outside—disconnects service to about 80 accounts a month for nonpayments, officials discussed at Wednesday’s work session at . The disconnect comes 15 days after a notice is sent by mail regarding the money owed.

“But after we cut them off, we really have no process in place at the moment to go after those fees,” said Finance Director Amy Davis, who . “A lot of them might come back and pay the bill, but then they don’t pay that extra 15 days and the delinquent fees.”

Councilman Al Thurman asked why more notices aren’t sent out, with Davis saying the city doesn’t have the staff to do it in-house.

The longer money is owed on an account, the less likely it will be collected, Davis said. Chances are now heading toward 0 percent, she said, “because we’re not doing anything.”

If the city contracted with Transworld Systems collection agency, delinquent customers would receive two calls, two letters, and finally a warning letter spread out between 30 and 60 days of being overdue. These messages would be delivered under the city of Powder Springs name, and the city would still be able to collect payments in house.

Then, from 70 to 110 days, five demand letters would be spread out under the third-party collection name.

At 120 days, “intensive collections” and legal action begin. This is the stage that represents the $300,000 currently owed and is where Transworld would begin to collect that money, Davis said.

If Transworld handled 100 delinquent accounts, the city would be charged a $13.25 flat rate per account for a total of $1,325 (discounts are offered when the total is paid in full upfront).

Discounts are also given for signing on for more accounts; for example, if Transworld took on 15,000 accounts, the flat rate per account would drop to $7.25 each.

Such charges come during the period of 30 to 110 days. At 120, Transworld gets 50 percent of the payment because of the difficulty in getting the money at that point, Davis said.

Through the program, though, about 80 percent of accounts are paid off closer to the 30-day mark, she said.

Davis explained that the city would be able to have discrestion over the accounts being turned over and would work with residents, including perhaps the allowance of partial payments.

Councilwoman Nancy Hudson asked what happened when people move and are hard to track down. Davis said that, with customers initially providing their Social Security number and birthday, Transworld is able to use its national databases to find them.

In March, officials , which resulted in mostly increases but provided some opportunities for savings for small residential customers. From January to March, as officials were preparing the restructuring, Powder Springs lost about $90,000 following a 12 percent water-sewer increase from the Cobb County-Marietta Water Authority.

Also changed at that time were reimbursable water and sewer deposits. A $50 sewer deposit was added for new customers only, in addition to the existing $50 water deposit.

For renters, who officials said are worse about leaving balances, a new $75 sewer deposit was started, and the existing $50 water deposit was raised to $75.

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