The Louisiana Department of Revenue issued a Request for Proposals Thursday for debt collectors to work for the state’s new Office of Debt Recovery. ODR would be part of the Department of Revenue, and would be responsible for the collection of delinquent debts on behalf of state agencies. While ODR staff will be the primary collection officers, contracted agencies would provide debt collection services on an as-needed basis.
Not only will contractors have the opportunity to collect delinquent state debts for ODR, but they will also have the ability to sue consumers. According to the RFP, “litigation for collection purposes shall be initiated only upon prior written approval of LDR,” and the collection agency would have to pay for all litigation expenses.
All out-of-state accounts will be original assignments. This means collection agencies working with ODR would have to be licensed in Louisiana and in the state(s) where these accounts exist, if that state requires debt collectors to be licensed. In-state accounts may be original, or the Louisiana Attorney General’s Office may have handled them in the past.
In order to qualify for this new contract, collection agencies must:
- Provide the last three consecutive years of audited financial statements
- Submit the names and addresses of banking and lending institutions it uses to conduct business and obtain loans.
- Include a statement which attests that it has and shall continue to comply with the Louisiana Collection Agency Regulation Act (LCARA). In select alternative cases, collection agencies can submit a statement which outlines and explains the reasons why it’s not required by law to comply with LCARA.
“Outside collection agencies will receive a fee over and above the amount that they collect on behalf of participating state agencies,” said Byron Henderson, Public Information Director for the Louisiana Department of Revenue. “Collection agencies’ fee percentage is not established yet for service to ODR, but current fees for similar work provided to the Department of Revenue range between 15 and 18 percent.”
ODR will pay for this bigger cut to collection agencies through a 25 percent administrative fee that will be added on to the consumer’s existing debt. Henderson says it’s too soon to predict how much money ODR will be able to collect.
Proposals are due September 1. After that, contracts arising from the RFP are tentatively scheduled to run from December 2014 until December 2017. However, last week Louisiana Secretary of Revenue Tim Barfield said ODR wouldn’t be fully operational for another three years.
The state plans to issue a second RFP in mid-August for an automated collection system for ODR.