Chapter 4.40
UNCOLLECTABLE ACCOUNTS AND BAD DEBT WRITE-OFFS—MUNICIPAL CREDIT AND COLLECTIONS POLICY
Sections:
4.40.010 Definitions.
4.40.020 Municipal credit policy.
4.40.030 Municipal collections policy.
4.40.040 Write-off of uncollectable accounts.
4.40.050 Utility debts remain with real property.
4.40.060 Authority to offset.
4.40.010 Definitions.
A. “Uncollectable accounts” refers to any account or debt owed the municipality which has become overdue by more than ninety days.
B. “Collection” means any action taken by the municipality to attempt to collect a debt or account which is overdue.
C. “Credit” means the extension of any services by the municipality to any person or entity for which a charge or fee is levied, and for which the charge or service is provided in advance of payment.
D. “Cash-only basis” means that any goods or services provided to a citizen must be prepaid, either by credit card or by placing cash on accounts in advance of billing.
E. “Debt” means any sum of money which a citizen of the city and borough, or customer of the municipality in some capacity, is legally obligated to pay to the city and borough for any purpose.
F. “Good standing” shall mean that any citizen, business, or other entity doing business with the city and borough does not have an account which is overdue.
G. “Overdue” refers to any debt owed to the city and borough of Sitka which has not been paid within thirty days of the date the payment was due. As an exception, debts owed for utility services consumed are considered overdue fifteen days after the date the payment was due.
H. “Write-off” refers to any debt for which collection action is no longer pursued.
(Ord. 16-06S § 4 (part), 2016: Ord. 95-1283 § 4 (part), 1995.)
4.40.020 Municipal credit policy.
A. The city and borough of Sitka shall, as a basic policy, provide goods and services to its citizens in advance of payment, and bill citizens for amounts owed.
B. If a citizen, business, or other entity has an unpaid bill which is more than one hundred twenty days old, and therefore has an overdue debt, the city and borough of Sitka may require all future business interactions between a citizen, business, or other entity to be henceforth conducted on a cash-only basis until credit is restored. Any determination to place a citizen, business or entity on a cash-only basis must be approved by the administrator. For purposes of municipal utilities and moorage, accounts will be required to be prepaid.
C. Once revoked, credit may be restored by returning to good standing. Good standing would be achieved by both resolving all overdue accounts and by written application to the municipality. The municipality may, at its discretion, require a deposit as a condition of restoring credit.
(Ord. 16-06S § 4 (part), 2016: Ord. 95-1283 § 4 (part), 1995.)
4.40.030 Municipal collections policy.
A. The city and borough of Sitka shall take lawful actions to collect all debts owed to the municipality which have become overdue.
B. The city and borough of Sitka shall employ progressive steps to attempt to collect debts owed to the municipality. These progressive steps may include the following:
1. Mailing of a collection dunning letter to the last known valid address of the debtor;
2. Mailing and physical posting of a utility disconnection notice for failure to resolve any debt owed the municipality;
3. Physical disconnection of utilities for failure to resolve any debt owed the municipality;
4. Forwarding of overdue accounts to a collection agency for further collection attempts;
5. Publication on the municipal website and/or in a local newspaper of the names of residents, businesses and other entities who meet all of the following criteria: (a) have a debt or debts owed to the municipality which are overdue; (b) to whom a collection/dunning letter has been written; and (c) who have not entered into a payment plan with the municipality;
6. Revocation of all credit by revoking the good standing of an individual, business or other entity and placing such an entity on a cash-only basis;
7. Filing of a civil suit in the appropriate legal jurisdiction for both a judgment of indebtedness and a writ of execution;
8. Employment of process servers to execute writs of judgment, taking all appropriate actions afforded by law to include till taps, bank account sweeps, and seizure of other collateral;
9. Filing of foreclosure lawsuits against all real property against which a deed of trust is held.
C. The city and borough of Sitka may, at its discretion, add collection costs to any overdue balance. As a matter of policy, collection costs will be added to all accounts turned over to a collection agency for further collection attempts.
D. The administrator shall have the authority to approve payment plans for overdue balances owed the municipality. This authority may be delegated. This authority shall include the ability to establish repayment terms. The following criteria shall be applicable to all payment plans:
1. A citizen, business, or entity may have only one active repayment plan at any time. Consolidation of multiple debts into repayment plans may occur at the discretion of the administrator.
2. Any payment plan shall be for past due balances only and shall contain a provision that all new balances must be paid in full in addition to required payment per the plan.
3. Unless unusual circumstances are present, no payment plan shall have a repayment term exceeding twelve months.
4. For any payment plan exceeding five thousand dollars, the municipality shall, as a matter of course, require the debtor to agree to a lien on real property owned by the debtor as a condition; agree to a confession of judgment; and agree to having reasonable legal fees added to any judgment obtained by the municipality.
5. Any uncured default on a payment plan shall constitute a reason for revocation of good standing and allow the municipality, at its discretion, to place the debtor on a cash-only basis.
(Ord. 16-06S § 4 (part), 2016: Ord. 95-1283 § 4 (part), 1995.)
4.40.040 Write-off of uncollectable accounts.
A. Unpaid debts for which more than one hundred twenty days has elapsed since the date of the bill or invoice, and which are under a cumulative amount of two hundred dollars per customer, may be written off immediately upon approval of the finance director, if they are deemed not to be cost efficient to attempt to collect on.
B. Unpaid debts for which more than one hundred twenty days has elapsed since the date of the bill or invoice, and which are under a cumulative amount of one thousand dollars per customer, may be written off immediately upon approval of the administrator, if they are deemed not to be cost efficient to attempt to collect on.
C. Unpaid debts for which more than one hundred twenty days has elapsed since the date of the bill or invoice, and which are over a cumulative amount of one thousand dollars per customer, may be written off immediately upon approval of the assembly.
D. Any overdue debt which is not collected within ninety days shall, as a matter of accounting policy, be recorded against the allowance for uncollectable accounts when applicable under governmental accounting guidelines. Collection actions shall not cease, however, until the debt is collected, a statute of limitations is reached, or the debt is written off. Any debt recorded against the allowance for uncollectable accounts, which is subsequently recovered, shall as a matter of accounting policy be recorded as a recovery of bad debt.
(Ord. 16-06S § 4 (part), 2016.)
4.40.060 Authority to offset.
A. If a resident, business, vendor, or other entity has an overdue balance owed to any department of the municipality (excluding Sitka Community Hospital), the municipality shall have the authority to offset such overdue balances against any payment to be made to such resident, business, vendor, or other entity unless otherwise prohibited by law.
B. No offset of an overdue balance shall occur unless the resident, business, vendor, or other entity is notified in writing of the overdue balance and afforded a minimum period of ten business days to remit the overdue balance. During this ten-business-day period, the municipality will withhold payments otherwise due.
(Ord. 16-06S § 4 (part), 2016.)