Unpaid municipal court fines and fees have become a $246 million problem in New Jersey, and towns throughout the state are turning to collection agencies to bring in some of that money.
In the last 20 years, local courts from Sussex to Cape May counties have accrued thousands — and in some cases millions — of dollars in outstanding debt from offenders who skipped out on court-mandated payment plans, traffic violations and more. In towns like Woodbridge, where the municipal court is currently owed more than $3.9 million, officials are hoping to take advantage of a relatively recent state law that allows them to bring in a private firm to help track down the deadbeats.
“The municipal court system does what it can to recoup the monies that are due and owed, but it is legally limited,” Woodbridge Township spokesman John Hagerty said. “The court does not have the authority to seek the physical arrest and restraint of violators. That is not the job of the court.”
Woodbridge has joined 45 other New Jersey towns in applying to the state Administrative Office of the Courts (AOC) for permission to institute a private collection program. Officially permitted under state law since 2011, the program allows towns to contract with private firms that will take over the local court’s outstanding debt and attempt to collect it through phone calls, letters and other means. In Middletown, where officials recently agreed to take steps to initiate the program, Township Administrator Anthony Mercantante said the municipality does not have the manpower to track down the $726,192 in debt on its own.
“There are some people who feel like this should be handled within the municipalities, and [towns should] not bring outside people in who are just going to be getting a commission, essentially,” he said. “But the reality is that most municipalities don’t have the ability to debt-collect. They don’t have staff to do that.”
Middletown Township Attorney Brian Nelson said the outstanding municipal debt is made up of thousands of smaller fines that stem from minor traffic and disorderly persons offenses, making debt collection a much more labor-intensive process.
“You are not going to have people that owe $25,000 or something like that,” he said.
According to AOC spokeswoman Winnie Comfort, the $246 million in statewide debt comes from approximately 513,000 cases, most of which involve traffic offenses.
Under the law, firms contracted by municipalities are allowed to add a surcharge of up to 22 percent on each collected debt, meaning their services would theoretically be paid for by the debtors themselves, not the towns. Only a portion of the total debt can be returned to the towns, however, because court fines and fees must be shared with the county and state.
In Middletown, for example, the township’s share of the $726,192 in debt owed to the town would only be $261,695. In Howell, where the municipal court is owed just over $1 million and the municipal share of that would be just under $448,000, officials expressed concern that they would be doing the legwork to collect hundreds of thousands of dollars for other entities.
“We don’t want to be stuck with a full share of the expense, but not getting the same pro rata share back on the return,” Howell Mayor William Gotto said.
“Other people need to pony up on that. … If there was a way to partner up with someone else, possibly at the county level or the state level, we would prefer to do that.”
Municipalities that institute the collection program must first come to terms with a private firm and then submit the contract to the AOC, which verifies that the arrangement complies with all federal and state debt-collection laws.
So far, 33 municipal contracts have been approved by the state, and 17 municipalities have implemented the program.
In Freehold Township, where unpaid court fines and fees top $635,000 and the municipal share of the debt collection would be nearly $340,000, officials say they believe their recently instituted collection program will help retrieve revenue while deterring future offenders from skipping out on payments. “From a business standpoint, it’s an accounts receivable. It’s money that is owed the township,” said Township Administrator Peter Valesi. “You have to collect it.
“The state did the right thing by taking this off the court’s plate,” he added. “The people that routinely skip out on fines because they know there was this black hole they can get through, now they know we are chasing this debt down. I think that this tightens up the whole system.”
Already, the township has begun sending out notices to court debtors, informing them that their accounts will be turned over to outside collectors, Valesi said. While he said he believes that some of the older debts may be captured, the focus will be on ensuring that newer debt doesn’t accrue.
“For some of these fines, the people have moved out and moved on. No firm is going to hire a private investigator to chase down a $250 fine,” he said.
Officials cite multiple causes for the large swaths of debt that have built up over the last two decades.
In Long Branch, where the court is owed more than $1.6 million, with a municipal share of $817,000, Business Administrator Howard Woolley Jr. said much of the fines stem from visitors and tourists, who leave town after being charged with violations.
“We have people that come through here in the summertime, from Pennsylvania or someplace, who get parking tickets or things of that nature,” he said. “Making that collection is not simple. … Other people might be incarcerated. So your pool of debtors is not going to be a highyield group. I’m assuming these firms will be going for the low-hanging fruit.”
Long Branch Court Administrator Terri Turner said a collections program may not be effective, since many people already fail to respond to the court’s warnings and punitive measures.
“A collection agency isn’t going to scare these people,” she said. “The court issues three notices before issuing a warrant. If a warrant for an arrest or suspension of driving privileges doesn’t have an effect, do you think a collection agency is going to scare them?”
“We’re doing the best we can,” she added. “Sometimes it’s a good month, sometimes it’s not. But it’s a bad economy. For some people, you have to choose between feeding your children, keeping a roof over your head or paying your fines. It’s tough. I do feel for some people.”
While acknowledging that much of the outstanding debt may belong to offenders who are either incarcerated or who have moved away, Mercantante said Middletown has seen a $100,000 increase in total debt in the last 18 months.
“There really isn’t a downside [to joining the program], other than just making some people annoyed,” he said.
In Long Branch, Woolley said city officials discussed initiating a collection program but decided to wait and see how it works for other municipalities.
“We didn’t want to be the guinea pigs,” he said.
In Howell, Gotto said he was concerned that the program would cost the township more money than it brought in.
“Anytime that we have worked with a vendor for anything at the municipal level, there is never a time where there is not a cost to the township,” he said. “There are almost always things like up-front costs, setup fees, minimum contract amounts. … We don’t put things out to bid just because we can. It has to make sense.”
Valesi said he is confident that Freehold Township’s program will pay dividends, but only time will tell exactly how much.
“The proof is going to be in the pudding,” he said.