City plans to go after debtors
Almost 1,000 Medford residents haven’t paid their utility bills in at least 90 days, amassing $855,000 in unpaid debt that may soon earn them a call from a collection agency.
Two years ago, the Medford Water Commission and the city of Medford went their separate ways, creating two separate billing systems. Separating the bills also created a problem for the city since it can no longer shut off the water for customers who don’t pay.
“We still have some customers who have never paid since we separated, and that is frustrating,” said Lorraine Peterson, business manager for Medford Public Works.
To combat the problem, the city is looking for a collection agency that will go after residents who haven’t paid their bills in 90 days or more.
“I don’t think it’s right that customers who pay their bills should bear the costs for those who don’t pay their bills,” Peterson said. “We don’t want to raise the rates because of the bad accounts.”
Monthly utility bills typically include fees for sewer, storm drains, streets, parks and public safety. Unlike water, the city has no way to shut off those services for past-due bills. The city already uses a collection agency to recover certain bad debts but wants to hire an agency that specializes in collecting so-called unsecured debt, in which a lien can’t be placed on a private property.
A typical house has a bill of about $43 a month, so that after three months the amount owed could be less than $150.
Some collection agencies charge as much as a 50 percent fee. The city will notify customers that they also will be responsible for paying that charge if they don’t pay their bill, Peterson said.
If the collection agency is successful, the city would receive 100 percent of the unpaid bill.
Of the 26,000 accounts in Medford, the city has had problems collecting from 975 active and inactive accounts.
Some of the unpaid bills are from customers who have moved away, while others are from customers who’ve figured out the city is unable to do much about collecting the debt.
“Some of them have found out we have no recourse,” Peterson said. The non-payers tend to be renters or the elderly, she said.
Once the collection agency process begins, non-payers will have at least something to worry about: They could end up getting a poor credit score, Peterson said.
The Medford Water Commission has seen little change since it began sending out a different bill than the city, no doubt because it still has the ability to shut off the water.
“No, we’re not having the same problems,” said Laura Hodnett, spokeswoman for the commission.
Collections are down a bit, and the number of shut-offs because people haven’t paid their water bill are also down slightly, Hodnett said.
She said the typical water bill in the winter is about $10, and many residents initially waited a few months to pay the bill because it was so small. Now, residents are generally paying each month, Hodnett said.
Recently, the city of Medford requested that the Water Commission take an extra step before turning the water back on at a house that had a delinquent account. The city wanted the water commission to verify that the resident also had paid the city's utility bill.
Hodnett said the commission declined the request for various reasons, including potential legal issues.