With the current economic condition many sectors are being increasingly affected with many experiencing negative revenue for the first time in many years. This is also true with regard to many municipal governments who have recently stepped up efforts in collection many of their receivables. These receivables come in the form of unpaid parking tickets, dog catcher fines and even library fines etc. The problem is that most people don’t know that if these items are not paid they would have to be reported to the credit bureaus and your credit report will be negatively affected.

The problem is that even though the fines may be small the negative record is the same as if the fines were worth a lot more. Unfortunately most municipal councils have realized that they have fines that amount to many of millions of dollars that can easily be turned into cash if they sold the debt to collection agencies. Private collection agencies are re-known for threatening people with a negative record which they may or may not choose to send to the credit bureaus. The problem is that some collection agencies will tag on an extra 20% to the collectables. It may sound unlawful but it is totally legal. The collection agencies also have the right to report any debt that they might not be able to collect which can have a massive impact on your credit scores.

The number of municipal councils who have taken to sell their debt balance to private collection agencies have increased dramatically and as such the number of people that have been driven to a bad credit rating by these firms have increased dramatically too. The trend is only increasing as the government sector has realized that if the collection is turned over to these collection agencies that there will no longer be any risk to the collection agencies, rather they see as much as 80-90% of their receivables paid.

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