A proposal to boost Louisiana's debt collections by opening an Office of Debt Recovery advanced to the House floor on Tuesday. House Bill 629 would create the office within the state's Department of Revenue to pursue delinquencies more than 60 days overdue.

The state's House Committee on Ways and Means pushed ahead the bill. As part of it, the state's revenue department could snag tax refunds, casino winnings and funds from bank accounts from debtors owing money to the state. Driver’s and hunting licenses also could be held up.

Louisiana State Treasurer John Kennedy said the latest accounting figures estimate $690 million in payments to state government are at least 180 days past due. The debts range from delinquent college tuition installments to unpaid environmental monitoring fees.

The state's Attorney General’s Office collects debt for select state agencies but the Office of Debt Recovery would be designed to add to those efforts. Kennedy told lawmakers on Tuesday that state agencies such as the state Department of Transportation and Development are not built to act as collection agencies.

According to a financial analysis by the Legislative Fiscal Office, the state would create 23 positions and spend $1.7 million a year on salaries and benefits to focus on collections. For the upcoming fiscal year that begins July 1, the office estimated total administrative costs of $4.4 million for the new unit.

Officials had considered the idea of selling some of the bad debt to the private collections sector for cents on the dollar, thus receiving an immediate cash infusion, but ultimately rejected that plan.

Kennedy said improving collection efforts by even 10% a year could generate $100 million for the state's government.

The bill’s sponsor, state Rep. Chris Broadwater, said debtors would be charged a collection fee on top of their debt.

There is currently no schedule for

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry