Statute of limitations, deaths, and bankruptcy are just a few of the reasons the city is forced to write off debts that have yet to be paid.

WILMINGTON — As the City of Wilmington considers updating its current noise ordinance, much to the dismay of live music venues across the city, the city’s finance department is getting ready to deem more than $6,000 of noise citations as uncollectable due to their non-payment and the state’s statute of limitations expiring.

Every year during budget season localities go through their accounts from the previous years and see what bills are not being paid and then reclassify the ones that are non-collectible as such.

“The City Attorney’s office also reviewed a list of uncollectible accounts prepared by the Collections Division. These 248 accounts include prior employee accounts, Fire Prevention, Code Enforcement, Police and Retiree Insurance accounts totaling $150,231.72. The reasons these accounts were determined to be uncollectible include deceased no estate,” City Manager Sterling Cheatham wrote in the upcoming City Council agenda.

It is worth noting that just because the city reclassifies a debt as non-collectible, it does not forgive the debt.

“Adjusting the accounts off as uncollectible does not constitute forgiveness of the debt. The intent is to adjust the City’s financial records to accurately reflect accounts receivable balances that have reasonable assurance of collection,” Cheatham wrote.

Overall, between civil citations, an uncollectable home loan, a rehabilitation loan, and 368 delinquent trash and stormwater accounts, the city is prepared to write off $247,236.82 in uncollectable debts.

Failure to collect debts before the statute of limitations runs out is a costly expense for the city, one civil zoning citation that has exceeded the time for collectability has racked up a bill of more than $20,000.

Collections

Because of the potential loss of revenue, the city along with CFPUA is also considering entering into an agreement with a new debt collection agency at its upcoming Tuesday meeting.

According to the contract, “The collection agency will provide multiple services including, but not limited to:

• Notify customers of delinquent balances via mail and phone calls while offering a variety of payment methods to the customers.
• Report accounts to the three major credit reporting agencies after 90 days of assignment (Equifax, Experian, and TransUnion).
• Submit, update, and withdraw qualifying accounts to/from the N.C. Debt Setoff program.
• Provide documentation of uncollectible accounts to the Authority and City for write-off purposes.
• Make settlement agreements following the parameters set by the Authority and the City and notify the Authority and City of said settlements.
• Provide litigation for certain delinquent accounts.”

But these collection efforts don’t come cheap, the company would receive 20% of the collected debts that used standard collection methods and 35% of debts more than $3,000 that required legal action.