The town council in Selma N.C. joined a growing list of local governments hiring debt collection agencies to pursue delinquencies owed by residents.

The town hired TekCollect, based in Columbus, Ohio, to collect nearly $500,000 in unpaid utility bills. The council expects to collect at least $190,000. It will pay the agency $13,000 upfront for guaranteed collections on 500 of the estimated 1,200 accounts. If the agency falls short of the guarantee, it will repay the $13,000.

TekCollect representative Mark Graff, who said the agency can start work immediately, said the average debt his firm collects is $480. Graff said his company’s expertise is in tracking down those who have skipped and then collecting from them. Many would rather pay the past due amount than be dragged into court, he says.

The contract between the town and agency mirrors a deal reached last month between Smithfield, N.C. and TekCollect.

The firm gets debtors’ attention with a series of phone calls, mailings and reporting the debts to credit bureaus.

Selma Town Manager Richard Douglas said that in addition to the collection agency, the town could continue to forward delinquent accounts to the state Department of Revenue, which could collect the delinquent accounts for tax refunds.

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