Rita James of Atlanta, Georgia, received two tax bills after paying off her mortgage in 1994 -- one for her, and another for a man she had never heard of. She paid the first, ignored the second and, because of that, entered a prolonged legal battle that is only now ending eighteen years later.
James has narrowly avoided the loss of her home after a five-year legal battle over that second bill, the Atlanta Journal-Constitution reports . She wouldn’t have had to fight if not for her county's policy of selling tax liens, which are essentially claims for unpaid taxes, to private collection companies (h/t The Consumerist).
The case is complicated, but essentially involved a collection company claiming ownership of the house, auctioning off that house to another company, who then demanded back rent on the home that James thought she owned.
Tight budgets faced by governments around the country have have caused some, including James' home county of Fulton, to both get rid of financial responsibilities like these and resort to extreme measures to raise funds, as well as collect taxes they hadn’t bothered with in the past. Not to mention fees on things like blight ordinances and unpaid utility bills.
The debt collection industry, already personally dealing with an enormous number of Americans, has gotten an additional bump from government too. In James' case, the collection companies assumed responsibility for a problem the county gets to rid its hands of. While residents of Cuyahoga county, Ohio, for example, may have their debts passed on to collectors after nearby Canton County considered using such services to bring in unpaid water and sewer bills in April.
The feds aren't immune either, best exemplified by the Department of Education's continuous use of debt collectors to go after students that have defaulted on their loans. Indeed, debt collectors working with different levels of government earned a billion dollars over the course of a single year, according to Bloomberg. One debt collector even made $454,000 in a single year by swooping in to help the government.
Overall, debt collectors helped the federal government win back $28 billion in fiscal year 2008 alone.
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