Cash-strapped councils to hire debt collectors
Published 05/01/2012 | 05:00
A PROFESSIONAL debt collector is being sought by two local authorities to collect more than €7m owed to them in unpaid rates, development levies and housing loans.
Roscommon and Leitrim county councils have become the first local authorities in the State to seek specialist help to recover bad debts.
The two councils plan to jointly spend up to €150,000 to pursue hundreds of debtors through the courts.
The move comes because of swingeing cutbacks in central government funding, which has placed unprecedented pressure on cash-strapped councils.
Local authorities are owed hundreds of millions of euro by households and businesses, and are desperately attempting to recover the money to help avoid major service cuts.
Figures from the Department of the Environment show councils are owed €450m in unpaid development levies, another €152m in unpaid water charges and almost €190m in rates -- a total of €792m.
A spokesman for Roscommon County Council confirmed it was owed more than €7m from various debtors and that action was being taken because people refused to engage.
"The legal action is the last course of action we would take. People will get at least four letters from the council, and we even phone people to see if they will talk. But some people won't discuss their case until they receive a legal letter."
Debts to be recovered include non-payment of rent, housing loans, commercial rates, development levies, fire charges and litter fines.
Data provided by Roscommon County Council shows:
• Some 328 people are in arrears on housing loans. One in four is more than three months behind.
• A total of 1,870 businesses owe €3.3m in unpaid rates. Five owe more than €38,000.
• The council prosecuted 300 individuals and businesses in 2011, spending €92,000 trying to recover unpaid rates.
• €3.5m is owed by 800 developers in unpaid levies; 585 of these have owed the money for at least three years.
No breakdown has been provided by Leitrim County Council on what it is owed, but it expects to spend €20,000 on debt collection services this year. The value of the joint tender for both councils will be between €50,000 and €150,000.
The successful bidder, which is expected to be in place by May, will be hired for 18 months, with the possibility of a 12-month extension.
The contract will oblige them to send a demand letter, a follow-up letter and make at least two attempts to contact the debtor by telephone before legal proceedings -- mostly in the Circuit Court -- begin.