Collections:

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CollectionsIts Not Rocket Science

• Texas Municipal Courts Education Center
• Collections Webinar
• Jim Lehman
• Office of Court Administration

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Texas Office of Court Administration

• State Agency
• Created in 1977
• Chief Justice - Texas Supreme Court
• Provides Administrative Technical Support
• Serves approximately 2,600 courts in the state
• [phone]

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Five Part Presentation

• The Concept of Change
• Collections Perspectives
• The Importance of Court Collections
• General Attitudes About Court Collections
• Proactive Strategies

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STAND i
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D A Y
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turns T V
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d n u o r
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TICKETS

TICKETS
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IT
IT
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ARREST N-UP
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iiiiiiiiiiiii bags
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T O W N
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Solving the Puzzles

• Think!
• Think differently.
• Think like designer of the puzzle
• Think Outside of the Box

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Comfort Zone
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Comfort Zone
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GROWTH
Comfort Zone
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In Order to Grow We Must Make A Conscious
Decision to CHANGE!
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Change is often not easily embraced but is
almost always inevitable.

• ATTITUDE
• KNOWLEDGE
• TIME
• HAM FACTOR

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The Ham Factor
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COLLECTIONS PERSPECTIVES
Public Private Sector Views
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OPERATING CYCLE
CASH
ACCTS REC
INVENTORY
SALES
Private Sector
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Private Sector Characteristics

• Purpose Well Defined
• Clear Line of Responsibility/Accountability
• Significant Investment in Quality Staffing
• Significant Investment in Strategy/Planning
• Creativity is Encouraged

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Every Day A Debt Remains Uncollected the
Likelihood It Will Remain Uncollected Increases.
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DEPRECIATION The Incredible Shrinking Dollars.
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Private SectorCollections Targets

• ACA 90
• DB 85
• MED 70-80

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Private Sector Account Management
In-House

• 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
Outside
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JUSTICE CYCLE
LAW
ENFORCEMENT
CRIME
PENALTY
Justice System
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Public Sector Characteristics

• Purpose Often Generic, General, Broad
• Lines of Responsibility/Accountability Often
  Vague and/or Overlapping
• Staffing Often Limited By Resources Politics
• Strategy/Planning Often Short Range Stop Gap
• Maintaining the Status Quo Is The Norm

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USUALLY NO CONSIDERATION OF
RISK
DEPRECIATION
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Public SectorCollections Targets

• 50 - 60???

Survey Question 1
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Court Case Management
In-House

• Current - 60 Days
• 61-180 Days
• 181 Days

• 25 Collected
• 65 Collected
• Warrant Issued
• 10 Collected

In/Out?
Outside
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• GREATEST SIMILARITY
• Both provide goods and services.

GREATEST DIFFERENCE One is driven by profit,
one is driven by politics
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How Important Is Court Collections!!!
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On A Scale from One to Ten
10
1
Survey Question 2
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General Attitudes About Court Collections

• Court Philosophy
• These people cant pay and its not my job.
• Community Perception
• They dont expect us to pay and nobody cares.
• Government
• We dont have the time or money to invest.

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COMMON SIDE-EFFECTS

• Low Priority Expectations
• Perception - Inconsistent
• High Default Rate
• Expensive Often Ineffective
• Expensive Ineffective

• Presumption- Cant Pay
• Randomly Set Terms
• Weak Follow Up
• Warrant As Solution
• Credit/Recycle

Survey Question 3
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COMMON SIDE-EFFECTS

• Low Priority Expectations
• Perception - Inconsistent
• High Default Rate
• Expensive Often Ineffective
• Expensive Ineffective

• Presumption- Cant Pay
• Randomly Set Terms
• Weak Follow Up
• Warrant As Solution
• Credit/Recycle

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Presumptions
"an attitude or belief dictated by probability"
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Whatcha See
1
2
3
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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
Jodies jaw. The maximum fine is 10,000.00.
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QUESTIONS
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?
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Case Study No. 2

• Out of California
• 3rd Grade Ed
• Age 65-70
• Unemployed
• Lives w/relatives
• Owes 5K

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Case Study No. 2

• Out of Towner
• 3rd Grade Ed
• Age 65-70
• Unemployed
• Lives w/relatives
• Owes 5K

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COMMON SIDE-EFFECTS

• Low Priority Expectations
• Perception - Inconsistent
• High Default Rate
• Expensive Often Ineffective
• Expensive Ineffective

• Presumption- Cant Pay
• Randomly Set Terms
• Weak Follow Up
• Warrant As Solution
• Credit/Recycle

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WHO CAN'T PAY?
"who are we dealing with"
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Criminals 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
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Criminals
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Criminals

• 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 states population)
  offenders on supervised probation in Texas.

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Criminals

• There are approximately 150,000 (or less than 1
  tenth of 1 of the states 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.

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Criminals
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Criminals
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Criminals
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COMMON SIDE-EFFECTS

• Low Priority Expectations
• Perception - Inconsistent
• High Default Rate
• Expensive Often Ineffective
• Expensive Ineffective

• Presumption- Cant Pay
• Randomly Set Terms
• Weak Follow Up
• Warrant As Solution
• Credit/Recycle

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WHY???
"can't they pay"
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Show Me The Money!

• Housing.28
• Transportation...24
• Food..19
• Clothing..5
• Medical...5
• Insurance.5
• Other/discretionary14

American Collectors Association
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Discretionary 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.

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Discretionary 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
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COMMON SIDE-EFFECTS

• Low Priority Expectations
• Perception - Inconsistent
• High Default Rate
• Expensive Often Ineffective
• Expensive Ineffective

• Presumption- Cant Pay
• Randomly Set Terms
• Weak Follow Up
• Warrant As Solution
• Credit/Recycle

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RANDOM TERMS

• All Fines Cost At Pleading/Judgment
• All Court Cost At Pleading/Judgment
• Pay Over Length of Probation
• Pay Out Before Expiration Of Probation
• Minimum Payouts from 10-50 per month

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Six Common Reasons for Non-Payment

• Negligent
• Confused
• Temporary financial difficulty
• Seasonal
• Unexpected disaster
• Deliberate

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10
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COMMON SIDE-EFFECTS

• Low Priority Expectations
• Perception - Inconsistent
• High Default Rate
• Expensive Often Ineffective
• Expensive Ineffective

• Presumption- Cant Pay
• Randomly Set Terms
• Weak Follow Up
• Warrant As Solution
• Credit/Recycle

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PLAYERS IN THE PROCESS
Court Judge(s)
Enforcement Court Administrators Court
Clerks Probation Pre-trial Marshals Sheriffs Warra
nt Officers Bailiffs
Offenders Law Violators
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JUSTICE FOR SALECatch- 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

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Courts Collectors
Court Administrators Court Clerks Probation
Officers Pre-trial Staff Marshals Sheriffs Warrant
Officers Bailiffs Whoever
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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.

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Offender 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

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Offender Categories
35 to 50 - WILLS
30 to 40 - MIGHTS
8 to 10 - NOTS
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THE WALL
PETER
PAUL

• Rent/Mortgage
• Auto
• Utilities
• Food

• Insurance
• Unsecured Debt
• Luxuries

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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

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Inside the Offenders Head

• Self-fulfillment (Dont 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)

The Maslow Model
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COMMON SIDE-EFFECTS

• Low Priority Expectations
• Perception - Inconsistent
• High Default Rate
• Expensive Often Ineffective
• Expensive Ineffective

• Presumption- Cant Pay
• Randomly Set Terms
• Weak Follow Up
• Warrant As Solution
• Credit/Recycle

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Criminal Court Cost, Fees, FinesFY 2003
Based on 65 Collections Rate
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How Much Is That?Enough to write a check to

• Every County..1.5M
• Every City...445K
• Every Court.149K
• Every Judge.125K

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Silence of the Lambs
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CHEERS
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Unforgettable
It Was 1991!
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But Is It Just About Money?
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Consider the Case of Floridas Carlie Brucia
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The Suspect Joseph Smith

• Free even though he was in violation of probation
  terms for
• failure to pay court ordered fines and fees.

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The Heat- Hon. Harry Rapkin

• Judge Rapkin
• There is no debtors prison in Florida and Smith
  wouldnt have been held simply for not paying A
  BILL.

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The Message

• Some court orders are more important than
  others.
• Compliance is sometimes optional.
• The system is broken.

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The Impact of Unpaid Fines

• Loss of Public Revenues
• Decease In Services
• Increase in Taxes
• Weaker Government

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The potential for an even greater loss.
Friends and family of Carlie Brucia
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How Important Is Court Collections!!!
Survey Question 4
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THE 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.

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The Problem
Embedded Barriers

• Denial of the Issue
• Denial of Responsibility/Ownership
• Belief that There is No Solution

Practical Diagnosis
Historically there has never been an accounts
receivable mechanism in place in the judicial
process.
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Principals of Understanding

• A fine is punishment and not a BILL.
• The payment is the defendants 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.

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TWO BASIC CONCEPTS

• Pro-Active
• Re-Active

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Reactive

• Responsive - action occurs after default
• Recovery - damage control
• Timely follow-up enforcement
• Reduced effectiveness
• Passive Perception
• Pros Cons

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Reactive Process Is Response Oriented
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Proactive

• 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

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Proactive

• 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

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How People Pay
By Contact Not Contract
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Proactive

• 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

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Proactive Process Is Results Oriented
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Collections Matrix

• Agreement or Contract
• Breach or Default
• Confrontation
• Resolution

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The 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?

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Enforcing the Agreement

• Information
• Knowledge of the Process - CONTROL
• The Right to Enforce
• A Way to Enforce - CONTACT
• The Will to Enforce

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The Breach

• What is a breach or a default?
• When does breach or default occur?
• When Do We React?
• How Do We React?

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The Confrontation

• Letters
• Phone
• Face to Face
• Warrant
• Arrest

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DELINQUENCIES

• Prompt Follow Up
• Make CONTACT
• Establish CONTROL
• Get a COMMITTMENT
• Avenue of Retreat

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Letters Notices

• Identify (Case Number, Court, Etc.)
• Convey Official Authority
• Be as Brief as Possible
• Designed to Motivate As Well As Inform
• (Responsibility Consequences)
• Tell How Much, When, Where
• Leave The Offender Out

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Phone Face to Face Contact

• Identify
• Immediately Assume Role Control
• Establish A Serious Tone
• Be Organized Professional
• Listen, but dont empathize

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Symbols of Authority
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Warrant Arrest

• Trump Card
• Threat Often More Useful
• Last Possible Option
• Expensive
• Often Ineffective

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The Resolution

• Determine The Real Problem
• Listen, but dont empathize
• Evaluate Analyze
• Consider Options Alternatives
• Avoid Temporary Stop Gaps
• Look For The Permanent Solution

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Objections
Conditions

• Objections- are nothing more than excuses in the
  defendants mind that must be overcome.
• Conditions- are real reasons for nonpayment that
  actually exist.

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Collections Scenario 1FTA

• 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
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Collections Scenario 2Pay Plan

• Original Amt 500
• Balance 500
• Amt Due 125
• Status 10 days late

• You reach defendant at work. He tells you he
  couldnt pay this month, will catch up next
  month. Also tells you not to bother him at work
  no more.

Objection
Condition
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Collections Scenario 3Pay Plan

• Original Amt 1000
• Balance 500
• Amt Due 250
• Status Its Monday, payment is due on Friday.

• Defendant comes into office and says hes just
  started new jobcan pay half on Friday.

Objection
Condition
120
Collections Scenario 4Pay 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 girlfriends house in
  Little Rock, Arkansas. Says hes not working and
  cant pay anything.

Objection
Condition
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In Order to Collect You Must Connect!

• The Art of Skip Tracing

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InformationNeeded for searches

• Social Security Number
• Next of Kin
• Place of Employment
• List of Friends / Other Family

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Local 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

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Internet 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.com
• http//www.switchboard.com
• others Yahoo, MSN

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Internet 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)

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Internet Programs
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Texas Workforce

• Texas Workforce Commission
• 101 E 15th Street
• Austin, Texas 78778-001

Contact Mr. David Summers (512)
463-2423 david.summers_at_twc.state.tx.
us
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FUGINET
Computer equipment required PC Pentium Windows
95, 98, NT, ME, 2000 or XP 32 MB RAM or
higher 33.6 Modem or higher Internet
Access Browser must be Internet Explorer 4.0 or
higher or Netscape 4.0 or higher
TDCJ Barbara Weatherford Phone (936)
437-5164 Email barbara.weatherford_at_tdcj.state.tx.
us
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History Information on FUGINET
Offenses Residence Vehicle Employment Pre-Parole
Plan Alias Next of Kin Banking Social Security
Number SID Number Collateral Visit Inmate Visitor
Etc.
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TDCJ Intranet
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Keys to Success

• Attitude
• Commitment
• Patience
• Resolve
• Tenacity

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Start Something!

• If you cant take a big step, take a small step.
• If you cant 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,
  youll know for sure.
• --Ralph Marston

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"A fine is punishment for a crime only if it is
collected"
Jim Lehman, Russ Duncan, Don McKinley Office of
Court Administration 205 West 14th Street, Suite
600 Austin, Texas 78701 Telephone (512)
463-1625 Fax [phone]