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Collections: “It’s Not Rocket Science”. Texas Municipal Courts Education Center Collections Webinar Jim Lehman Office of Court Administration. Texas Office of Court Administration. State Agency Created in 1977 Chief Justice - Texas Supreme Court - PowerPoint PPT Presentation
Citation preview
Collections:Collections:“It’s Not Rocket Science”“It’s Not Rocket Science”
Texas Municipal Courts Education Center
Collections Webinar Jim Lehman
Office of Court Administration
2
Texas Office of Court Texas Office of Court AdministrationAdministration
State Agency Created in 1977 Chief Justice - Texas Supreme Court Provides Administrative & Technical
Support Serves approximately 2,600 courts in
the state (512) 463-1625
Five Part PresentationFive Part PresentationThe Concept of ChangeCollections PerspectivesThe Importance of Court CollectionsGeneral Attitudes About Court CollectionsProactive Strategies
Solving the PuzzlesSolving the Puzzles
Think!Think differently.Think like designer of the puzzleThink Outside of the Box
““In Order to Grow We Must Make In Order to Grow We Must Make A Conscious Decision to A Conscious Decision to
CHANGECHANGE!”!”
““Change is often not easily Change is often not easily embraced but is almost always embraced but is almost always
inevitable.”inevitable.” ATTITUDEATTITUDE KNOWLEDGEKNOWLEDGE TIMETIME HAM FACTORHAM FACTOR
The Ham FactorThe Ham Factor
COLLECTIONS PERSPECTIVES
“Public & Private Sector Views”
CASH
ACCTS REC
SALES
INVENTORY
OPERATING CYCLE
Private Sector
Private Sector CharacteristicsPrivate Sector Characteristics
Purpose Well DefinedClear Line of Responsibility/AccountabilitySignificant Investment in Quality StaffingSignificant Investment in Strategy/PlanningCreativity is Encouraged
““Every Day A Debt Remains Every Day A Debt Remains Uncollected the Likelihood It Will Uncollected the Likelihood It Will Remain Uncollected Increases.”Remain Uncollected Increases.”
0
10
20
30
40
50
60
70
80
90
100
0 29 Days 30 Days 60 Days 90 Days 6 Months 9 Months 12 Months 24 Months
DEPRECIATION – DEPRECIATION – “The Incredible “The Incredible
Shrinking Dollars.”Shrinking Dollars.”
0102030405060708090
100
Current 120 Days 270 Day
Private SectorPrivate SectorCollections TargetsCollections Targets
ACA 90%
D&B 85%
MED 70-80%
Private Sector Account Private Sector Account ManagementManagement
Current - 30 Days 31- 60 Days 61-120 Days 120 Days +
85% Collected 10% Collected 3% Collected 2 % Collected
Charge Off/Write Off
In-House
In-House
In-House
Outside
LAW
ENFORCEMENT
PENALTY
CRIME
JUSTICE CYCLE
Justice System
Public Sector CharacteristicsPublic Sector Characteristics
Purpose Often Generic, General, & BroadLines of Responsibility/Accountability
Often Vague and/or OverlappingStaffing Often Limited By Resources &
PoliticsStrategy/Planning Often Short Range &
Stop GapMaintaining the Status Quo Is The Norm
USUALLY NO CONSIDERATION USUALLY NO CONSIDERATION OF:OF:
RISK DEPRECIATION
Public SectorPublic SectorCollections TargetsCollections Targets
50% - 60%???
Survey Question #1
Court Case ManagementCourt Case Management
Current - 60 Days 61-180 Days
181 Days +
25% Collected 65% Collected Warrant Issued 10% Collected
In-House
In/Out?
Outside
GREATEST SIMILARITY:
“Both provide goods and services.”
GREATEST DIFFERENCE:
“One is driven by profit, one is driven by politics”
How Important Is Court How Important Is Court Collections!!!Collections!!!
On A Scale from One to On A Scale from One to Ten…Ten…
Survey Question #2
General Attitudes About Court General Attitudes About Court CollectionsCollections
Court Philosophy
“These people can’t pay and its not my job.”
Community Perception
“They don’t expect us to pay and nobody cares.”
Government
“We don’t have the time or money to invest.”
COMMON COMMON SIDE-EFFECTSSIDE-EFFECTS
Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle
Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective
Survey Question #3
COMMON COMMON SIDE-EFFECTSSIDE-EFFECTS
Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle
Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective
1 2 3
Whatcha See
Case Study No.#1
State of Texas vs Joe Truitt
Joe Truitt and his wife Jodie shared a textbook history of domestic violence: black eyes, broken bones, and broken promises. Joe already had served three years probation for pulling a gun on his older sister. He had spent time in jail for two misdemeanor assaults against his wife, and another two cases were pending. Once, in a fit of rage, Jodie says, he pushed her from a speeding car.
Joe has pled guilty to a third assault charge. He broke Jodie’s jaw. The maximum fine is $10,000.00.
1. As the Judge, would you impose the maximum fine?
2. If the maximum fine is imposed, can Joe pay it?
3. If less than the maximum is imposed, why?
QUESTIONS:QUESTIONS:
•Out of California
•3rd Grade Ed
•Age: 65-70
•Unemployed
•Lives w/relatives
•Owes $5K
Case Study No. 2
COMMON COMMON SIDE-EFFECTSSIDE-EFFECTS
Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle
Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective
Criminals & CrimeCriminals & Crime
CRIMINAL 1 : one who has committed a crime
CRIME 1 : an act or the commission of an act that is forbidden or the omission of a duty that is commanded by a public law and that makes the offender liable to punishment by that law;
CriminalsCriminals
CriminalsCriminals
There were 10.6 million new criminal cases filed in the state of Texas in 2003.
Of these new cases, only 11.9% were at the county and district court level.
As of 2002 (the latest figures available), there were 438,202 (2% of the state’s population) offenders on supervised probation in Texas.
CriminalsCriminals There are approximately 150,000 (or less than 1
tenth of 1% of the state’s population) adult prison inmates in the state of Texas.
59% of all prison inmates have a high school diploma or equivalent.
Two-thirds of all prison inmates were employed the month before they were arrested for their current offense.
CriminalsCriminals
COMMON COMMON SIDE-EFFECTSSIDE-EFFECTS
Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle
Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective
Show Me The Money!Show Me The Money!
American Collectors Association
Housing………………….28%Housing………………….28%
Transportation…………...24%Transportation…………...24%
Food……………………..19%Food……………………..19%
Clothing…………………..5%Clothing…………………..5%
Medical…………………...5%Medical…………………...5%
Insurance………………….5%Insurance………………….5%
Other/discretionary………14%Other/discretionary………14%
Discretionary DollarsDiscretionary Dollars
It is estimated Texas Courts Assessed Approximately $1.1B in Fines and Fees in FY 03 or about $52 for every person in the State.
In FY 03 the State of Texas reported approximately $2.96B in gross lottery ticket sales or about $142 for every person in the State.
Discretionary DollarsDiscretionary Dollars It is estimated that in FY 2003, the average per
case assessment for Texas courts was approximately $104.
A recent study of state lotteries found that lottery players with incomes below $10,000 spend an estimated $597 per year playing the lottery.
The same study found that lottery players with incomes between $50,000 and $100,000 spend an estimated $225 per year playing the lottery.
NASPL
COMMON COMMON SIDE-EFFECTSSIDE-EFFECTS
Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle
Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective
RANDOM TERMSRANDOM TERMS
All Fines & Cost At Pleading/JudgmentAll Court Cost At Pleading/JudgmentPay Over Length of ProbationPay Out Before Expiration Of ProbationMinimum Payouts from $10-$50 per month
Six Common Reasons Six Common Reasons for Non-Paymentfor Non-Payment
NegligentNegligentConfusedConfusedTemporary financial difficultyTemporary financial difficultySeasonalSeasonalUnexpected disasterUnexpected disasterDeliberateDeliberate
70%70%
10%10%
COMMON COMMON SIDE-EFFECTSSIDE-EFFECTS
Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle
Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective
PLAYERS PLAYERS IN THE PROCESSIN THE PROCESS
CourtJudge(s)
EnforcementCourt Administrators Court ClerksProbationPre-trialMarshalsSheriffsWarrant OfficersBailiffs
OffendersLaw Violators
JUSTICE FOR SALEJUSTICE FOR SALECatch- 22Catch- 22
Texas Government Code 420.14 – “Says a judge may be cited for judicial misconduct if a reasonable effort is not made to collect cost…”
Opinion No. 105 of the Code of Judicial Conduct
“Says a judge should not personally be involved in collecting fees…”
Court’s CollectorsCourt’s Collectors
Court AdministratorsCourt ClerksProbation OfficersPre-trial StaffMarshalsSheriffsWarrant OfficersBailiffsWhoever
The Image of Collectors
True or False- “Collectors continually hassle people who cannot pay.”True or False- “All collectors are the same.”True or False- “Tough, threatening collectors are the most effective.”
Offender ProfilesOffender Profiles The Angry Offender The Jerk Offender The Happy Friendly Offender The Educated/Connected Offender The Crying Offender The Impatient Offender The Sick Offender The Slow Offender The Foreign Offender The Dangerous Offender
Offender CategoriesOffender Categories
35 to 50% - WILLS
30 to 40% - MIGHTS
8 to 10% - NOTS
THE WALLTHE WALL
Insurance Unsecured Debt Luxuries
Rent/Mortgage Auto Utilities Food
PETER PAUL
The Art of Collections
Collector
One who successfully encourages a debtor that it is in their best interest to pay what they owe.
(Not to be confused with a cashier)
Key Elements
1. Ability
2. Motivation
•Self-fulfillment (Don’t Bother Me Now)•Esteem (Do You Know Who I Am)•Social (Will My Neighbors Find Out)•Security (What About My Credit•Physical (Rent Is Due)
Inside the Offender’s Head
COMMON COMMON SIDE-EFFECTSSIDE-EFFECTS
Presumption- “Can’t Pay” Randomly Set Terms Weak Follow Up Warrant As Solution Credit/Recycle
Low Priority – Expectations Perception - Inconsistent High Default Rate Expensive Often Ineffective Expensive & Ineffective
Criminal Court Cost, Fees, & FinesCriminal Court Cost, Fees, & FinesFY 2003 FY 2003
$397 Million
$738 Million
Collected
Uncollected
Based on 65% Collections Rate
How Much Is That?How Much Is That?Enough to write a check to:Enough to write a check to:
Every County..……………$1.5MEvery City..……………….$445KEvery Court……………….$149KEvery Judge……………….$125K
But Is It Just About Money?But Is It Just About Money?
The Impact of Unpaid FinesThe Impact of Unpaid Fines
Loss of Public Revenues Decease In Services Increase in Taxes Weaker Government
How Important Is Court How Important Is Court Collections!!!Collections!!!
Survey Question #4
THE ISSUETHE ISSUE
“Lack of compliance in paying court fines and fees denies a
jurisdiction revenue and, more important, calls into question the authority and effectiveness of the
court and the justice system.”
The ProblemThe Problem
Denial of the IssueDenial of Responsibility/OwnershipBelief that There is No Solution
Embedded Barriers
“Historically there has never been an accounts receivable mechanism in place in the judicial process.”
Practical Diagnosis
Principals of UnderstandingPrincipals of Understanding A fine is punishment and not a “BILL”.
The payment is the defendant’s responsibility.
It is expected that the defendant must sacrifice to pay.
The defendant must give payment the highest priority.
The defendant must expect consequences if payment is not made.
The defendant needs to understand the consequences.
The payment is a Court Order, a sentence which may not be convenient.
A court is not where people prefer to spend money.But, many people come to court with money.
TWO BASIC CONCEPTSTWO BASIC CONCEPTS
Pro-Active Re-Active
Responsive - action occurs after default Recovery - damage control Timely follow-up & enforcement Reduced effectiveness Passive Perception Pros & Cons
ReactiveReactive
Reactive Process Reactive Process Is Response Is Response OrientedOriented
Preventive - definitive action taken to deter default Qualification - standards established for
acceptance (Personal & Financial Info.) Clarification - clear and precise dissemination of
responsibility & consequence Swift follow-up & enforcement (Re-Active) Aggressive Perception Pros & Cons
ProactiveProactive
Preventive - definitive action taken to deter default Qualification - standards established for
acceptance (Personal & Financial Info.) Clarification - clear and precise dissemination of
responsibility & consequence Swift follow-up & enforcement (Re-Active) Aggressive Perception Pros & Cons
ProactiveProactive
How People PayHow People PayA Pay On Time. They Act At Once!
B A little late. They act after a little time passes.
C Whenever we choose.
We never hear from these folks.
“By Contact Not Contract”
Preventive - definitive action taken to deter default Qualification - standards established for
acceptance (Personal & Financial Info.) Clarification - clear and precise dissemination of
responsibility & consequence Swift follow-up & enforcement (Re-Active) Aggressive Perception Pros & Cons
ProactiveProactive
Proactive Proactive Process Is Process Is Results Results OrientedOriented
Collections MatrixCollections Matrix
Agreement or ContractBreach or DefaultConfrontationResolution
The AgreementThe Agreement
Citation Oral Instructions Court Order Payment Agreement
Do We Understand It? Does the Offender
Understand It? Does the Offender
Have the Ability to Comply?
Is It Enforceable?
Enforcing the AgreementEnforcing the Agreement
InformationKnowledge of the Process - CONTROLThe Right to EnforceA Way to Enforce - CONTACTThe Will to Enforce
The BreachThe Breach
What is a breach or a default?When does breach or default occur?When Do We React?How Do We React?
The ConfrontationThe Confrontation
LettersPhoneFace to FaceWarrantArrest
DELINQUENCIESDELINQUENCIES
Prompt Follow Up Make CONTACT Establish CONTROL Get a COMMITTMENT Avenue of Retreat
Letters & NoticesLetters & Notices
Identify (Case Number, Court, Etc.)Convey Official AuthorityBe as Brief as PossibleDesigned to Motivate As Well As Inform
(Responsibility & Consequences)Tell How Much, When, & WhereLeave The Offender & Out
Phone & Face to Face Phone & Face to Face ContactContact
IdentifyImmediately Assume Role & ControlEstablish A Serious ToneBe Organized & ProfessionalListen, but don’t empathize
Symbols of AuthoritySymbols of Authority
Warrant & ArrestWarrant & Arrest
Trump CardThreat Often More UsefulLast Possible OptionExpensiveOften Ineffective
The ResolutionThe Resolution
Determine The Real ProblemListen, but don’t empathizeEvaluate & AnalyzeConsider Options & AlternativesAvoid Temporary Stop GapsLook For The Permanent Solution
ObjectionsObjections Conditions
Objections- are nothing more than excuses in the defendant’s mind that must be overcome.
Conditions- are real reasons for nonpayment that actually exist.
Collections Scenario 1Collections Scenario 1FTAFTA
Original Amt: $230 Balance: $225 Amt Due: $225 Status: Defendant is
35 days beyond appearance date.
Defendant sends in a money order for $5 along with a note that says this is all she can afford.
Objection Condition
Collections Scenario 2Collections Scenario 2Pay PlanPay Plan
Original Amt: $500 Balance: $500 Amt Due: $125 Status: 10 days late
You reach defendant at work. He tells you he couldn’t pay this month, will catch up next month. Also tells you not to bother him at work “no more.”
Objection Condition
Collections Scenario 3Collections Scenario 3Pay PlanPay Plan
Original Amt: $1000 Balance: $500 Amt Due: $250 Status: It’s Monday,
payment is due on Friday.
Defendant comes into office and says he’s just started new job…can pay half on Friday.
Objection Condition
Collections Scenario 4Collections Scenario 4Pay PlanPay Plan
Original Amt: $500 Balance: $500 Amt Due: $250 Status: Defendant is a
little more than 60 day past due.
You reach defendant at his girlfriend’s house in Little Rock, Arkansas. Says he’s not working and can’t pay anything.
Objection Condition
In Order to Collect You In Order to Collect You Must Connect!Must Connect!
The Art of Skip Tracing
InformationInformationNeeded for searches Needed for searches
Social Security NumberNext of Kin Place of EmploymentList of Friends / Other Family
Local ContactsLocal Contacts
Water / Elec. Company Telephone Company
– Pager / Cell Phone / Internet
Your County Offices– Birth Cert.– Marriage license
Other Law Enforcement Agencies TCIC/NCIC Local Cable Companies Local Video Stores
Internet ProgramsInternet Programs Public Data
http://www.publicdata.com
DCS Information Systems
https://search.dcsinfosys.com
Social Security Death Index Interactive Search
http://ssdi.rootsweb.com/cgi-bin/ssdi.cgi Internet Phone Books
http://www.555-1212.comhttp://www.switchboard.comothers: Yahoo, MSN
Internet ProgramsInternet Programs
Classmates.com
Reverse Phone Books
Find People Search
www.freeality.com/findet.htm
Credit Reports http://www.hartsoftware.com SSN Trace Credit Reports (money)
Internet ProgramsInternet Programs
Texas WorkforceTexas Workforce
Texas Workforce Commission101 E 15th Street
Austin, Texas 78778-001
Contact: Mr. David Summers
(512) 463-2423
FUGINETFUGINET
TDCJTDCJBarbara WeatherfordBarbara Weatherford
Phone: Phone: (936) 437-5164(936) 437-5164Email:Email:[email protected]@tdcj.state.tx.us
Computer equipment required PC PentiumWindows 95, 98, NT, ME, 2000 or XP32 MB RAM or higher33.6 Modem or higherInternet AccessBrowser: must be Internet Explorer 4.0 or higher or Netscape 4.0 or higher
History InformationHistory Information on on FUGINETFUGINET
OffensesResidenceVehicleEmploymentPre-Parole PlanAliasNext of KinBankingSocial Security NumberSID NumberCollateral VisitInmate Visitor Etc.
TDCJ Intranet
Keys to SuccessKeys to Success Attitude Commitment Patience Resolve Tenacity
Start Something!Start Something!
If you can’t take a big step, take a small step.
If you can’t take a small step, take a tiny step.
Take Action, and you will no longer merely think you can do it. After even the smallest step, you’ll know for sure.
--Ralph Marston
Jim Lehman, Russ Duncan, Don McKinley
Office of Court Administration
205 West 14th Street, Suite 600
Austin, Texas 78701
Telephone: (512) 463-1625
Fax: (512) 463-1648