When my wife and I go to the cineplex in a nearby California municipality, it is not easy to park legally. All legal street parking (and the great majority of spaces in the nearby municipal parking garage) features two hour limits. Any ordinary movie, with promotional and coming attraction trailers, more often than not will run longer than two hours. Arrive anytime past early morning, and the extra time slots (located on remote upper garage floors) will typically all be occupied.
A cynic will readily guess that this particular municipality, like many others, deliberately makes legal parking impossible in order to use parking tickets as a form of supplementary taxation. Anarchists like myself often just tear up tickets issued by dollar-snatching localities that we do not live in. But, as the Wall Street Journal warns, the days when this kind of payment compliance was semi-voluntary may be nearing an end:
A growing number of routine municipal fines and fees — including unpaid parking tickets, library fines, and trash-collection charges — are starting to damage consumer-credit scores.
In the face of budget crunches, major cities, including New York, Chicago and Miami, are hiring private collection agencies to chase down small debts that are frequently shrugged off by consumers. Since an outstanding account handled by a private collection company can wind up in a credit file, more consumers are discovering that niggling government fees — like unpaid speeding tickets or dog-catcher fines — are marring their credit. It’s up to each city to decide whether such information will end up in a consumer’s credit file.
Claude DaCorsi, a management consultant in Portland, Ore., used to pride himself on his near-perfect credit rating. But during a recent routine credit check, he discovered his credit scores had plunged to “below average.”
The reason: Two late library books, including a picture book taken out for his two-year-old son. The library had turned over the $40 late fee to a private collection agency.
Mr. DaCorsi, who says the black mark affected his interest rate on a home loan, has since barred his children from visiting the library. “We go to Barnes & Noble now,” he says. “We can get books there without fear of retribution.”
A handful of cities, including San Diego and Chicago, have worked with collection agencies since the late 1990s. But the trend is spreading rapidly around the country as strapped local governments look for creative ways to boost revenue without raising taxes and fees. Over the past few years, local governments in places including Seattle; Anchorage, Alaska; Austin, Texas; and Florida’s Miami-Dade County have contracted with private agencies to collect late parking tickets and court fees. In New York City, Baltimore and Dallas, libraries use private collection firms to recover fines. New York state recently hired a collection company to pursue overdue E-ZPass toll bills…
Local governments are also using collection agencies to track down some more-unusual fees. In Florida, some municipalities have used a private agency to track down swimmers who fail to pay “beach rescue” fees after they are rescued by lifeguards. San Diego courts have used collection agencies to collect fines issued to people caught riding the trolley system without tickets, according to AllianceOne, a Pennsylvania-based collection firm that works with court systems around the country…
Some cities are using collection agencies to chase down debts that are over a decade old, which can lead to surprises for consumers. Last July, Phillip Remstein of King of Prussia, Pa., received a notice in the mail from a collections company requesting $53 for a Philadelphia parking ticket issued in 1993. “It was ridiculous,” says Mr. Remstein. “I didn’t hear from them for 12 years and suddenly they want to collect?”…
Even when the dollar amounts involved in the fines are small, any collections activity in a credit file can do serious damage to a credit score. “It’s a very serious negative item on your report, on par with a tax lien or a bankruptcy,” says Maxine Sweet, vice president of public education at Experian. “You will definitely pay more for your credit, in higher interest rates and higher down payments.”
A library fine reported to a credit bureau, for example, can knock as much as 100 points off a credit score, making it difficult for someone with previously good credit to get the best rate on a loan, consumers and industry experts say. (Credit scores calculated by Fair Isaac Corp., the leading provider of such scores, typically range from 300 to 850; any score above 700 will generally get you the best rate on a loan.) Collections activity can stay on a report for seven years.