GOVERNMENT CAN BE MORE PRODUCTIVE IN COLLECTING ITS DEBTS BY FOLLOWING COMMERCIAL PRACTICES

• NCJ Number: 65516
• Author(s): ANON
• Date Published: 1979
• Length: 59 pages
• Corporate Author: US Comptroller General
• Sale Source: Azimuth Inc.
• Language: English
• Country: United States of America
• Note: THERE IS A CHARGE FOR MORE THAN ONE COPY.

Annotation

THE GENERAL ACCOUNTING OFFICE (GAO) EXAMINED GOVERNMENT DEBT COLLECTION PRACTICES COMPARED TO THOSE OF COMMERCIAL FIRMS AND CONCLUDED THAT CERTAIN PRIVATE SECTOR METHODS SHOULD BE ADOPTED.

Abstract

THE NUMBER OF DEBTS OWED THE GOVERNMENT IS INCREASING RAPIDLY AND INCLUDES STUDENT LOANS, OVERPAYMENTS OF SOCIAL SECURITY AND VETERANS' BENEFITS, ROYALTIES, AND SALES OF GOODS AND SERVICES. FEW AGENCIES HAVE ALLOWANCES FOR UNCOLLECTIBLE ACCOUNTS, AND MOST SIMPLY WRITE OFF DEBTS THEY CANNOT COLLECT. IN FISCAL 1978, MANNER. UNIT COST COMPARISONS BETWEEN PRIVATE AND GOVERNMENT DEBT COLLECTION EFFORTS SHOW THAT THE GOVERNMENT'S METHODS ARE SLOWER, MORE EXPENSIVE, AND NOT COST EFFECTIVE. BASED ON COMMERCIAL EXPERIENCES AND RESULTS ACHIEVED BY A NEW JERSEY STATE AGENCY, THE REPORT RECOMMENDED THAT THE GOVERNMENT ADOPT THE FOLLOWING PRACTICES: REPORT DEBTS TO CREDIT BUREAUS AND USE THEIR SERVICES TO LOCATE DELINQUENT DEBTORS; USE MORE AUTOMATION IN COLLECTION PROCESSES; AND IMPROVE THE CONTENT OF DEMAND LETTERS BY SPECIFYING PAYMENT DATES, INTEREST CHARGES, AND ACTIONS THAT WILL BE TAKEN IF DEBTS ARE NOT PAID. FEDERAL AGENCIES RELY ON PERSUASION AND LEGAL ACTION TO COLLECT DEBTS, WHEREAS COMMERCIAL FIRMS EMPLOY AGGRESSIVE COLLECTION ACTIONS BACKED BY CONSEQUENCES OF ADVERSELY AFFECTING THE DEBTOR'S CREDIT RATING. FEDERAL AGENCIES ARE NOT PERMITTED TO USE PRIVATE COLLECTION FIRMS UNLESS GIVEN SPECIAL AUTHORITY, BUT AN EXPERIMENTAL PROGRAM HAS BEEN IMPLEMENTED BY THE OFFICE OF EDUCATION TO TEST THIS METHOD. GAO SUGGESTS THAT ALL DEPARTMENTS AND AGENCIES EXAMINE THE COSTS AND BENEFITS OF AUTOMATION, REVISE THEIR DEMAND LETTERS, AND SECURE AUTHORIZATIONS FROM CLIENTS WHICH ALLOW THE LOAN TO BE REPORTED TO CREDIT BUREAUS. CREDIT BUREAU SERVICES SHOULD BE USED TO COLLECT STUDENT LOANS AND EDUCATIONAL ASSISTANCE OVERPAYMENTS. THE APPENDIXES CONTAIN A LIST OF GAO REPORTS ON DEBT COLLECTION FROM 1973 TO 1978, AGENCIES REVIEWED FOR THE REPORTS, COMMENTS ON THIS STUDY FROM THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, AND INFORMATION ON THE NEW JERSEY COLLECTION PROJECT. (MJM)