HomeMy WebLinkAbout410 - Uncollectible General Accounts Receivable CITY OF REDDING, CALIFORNIA
COUNCIL POLICY
• SUBJECT RESOLUTION NUMBER POLICY
NUMBER EFFECTIVE
DATE PAGE
UNCOLLECTIBLE GENERAL ACCOUNTS
RECEIVABLE 91-482 410 11/05/91 1
BACKGROUND
The Finance Department is charged with the responsibility of
administering General Accounts Receivable for the City . After
due diligence collection efforts by the City , uncollectible
accounts are customarily written off and handled depending on
dollar impact in one of the following manners: ( 1) Referred to
collection agencies with which the City has a contractual rela-
tionship; (2 ) Referred to the City Attorney for recovery through
the courts; (3) Filed as claims in Small Claims Court by Finance
staff; or (4 ) Handled by Finance staff based on a case-by-case
analysis as deemed appropriate.
PURPOSE
The goal of the Policy regarding Uncollectible General Accounts
Receivable is the efficient handling of uncollectible accounts
for which referral to collection agencies or the courts would be
futile and not cost effective .
POLICY
The Director of Finance shall have the authority to write off and
clear as uncollectible any general account receivable for which
the balance due the City is less than $5 , 000 meeting the follow-
ing criteria:
1 . Where the debtor is determined to be deceased with no surviv-
ing spouse and Finance staff has ascertained that the individ-
ual ' s estate is insufficient to pay the amount due , with such
finding supported by official agency (police , coroner) docu-
mentation, where Finance staff has determined through re-
search that decedent debtor has or is unlikely to have suffi-
cient discoverable assets or resources to clear the debt .
2 . Where the debtor is determined to be physically incapacitated
to such an extent that determination of the probability of
his/her regaining the ability to pay the debt is doubtful or
impractical , e .g. , chronic vegetative state, coma , etc . , as
supported by a written statement from the debtor ' s physician.
3 . Where the debtor is determined to be incarcerated in a state
prison for a long-term commitment , i. e. , over one year ,
requiring an unreasonable and non-cost-effective effort on
the part of Finance staff to track subsequent ability to pay
the debt following the debtor ' s release . (Where the debtor
has been sentenced to local county facility commitment as
ro m.n
CITY OF REDDING, CALIFORNIA
COUNCIL POLICY
. SUBJECT RESOLUTION POLICY EFFECTIVE PAGE
NUMBER NUMBER DATE
UNCOLLECTIBLE GENERAL ACCOUNTS .
RECEIVABLE 91-482 410 11 /05/91 2
part of a grant of probation , i .e . , less than one year , the
matter will be referred to a collection agency. If the debt
is one for which the sentencing court has ordered restitution
and named the City as the victim to receive restitution ,
there may be some recourse through the Probation Department. )
4 . Where the debtor is determined to be housed in a mental
health facility for a period of such length or lack of defini-
tion that determination of the debtor' s ability to pay the
debt subsequent to release would be problematic and/or unrea-
sonable , as supported by the written statement of an attend-
ing mental health care provider .
5 . Where it is determined that the debtor ' s sole source of
income is a grant from a social services program (AFDC, SSI ,
etc. ) against which a creditor is prevented from lodging a
lien . (The mere fact that a debtor is found to be the recipi-
ent of such aid would not prevent a reasonable effort to
determine whether the debtor possesses other assets or re-
sources against which a lien could be lodged , other than the
granting social service agency resource . )
6 . Where the claim cannot be supported by documentation as to
the debtor ' s responsibility with regard to the claim, e .g . ,
upon receipt of information that the debtor was wrongly named
as the responsible party by the reporting agency or that the
contractual arrangement giving rise to the claim no longer
exists .
The City Manager shall have the authority to approve the write-
off as uncollectible of any general account receivable meeting
the above criteria for which the balance due the City is equal to
or in excess of $5 , 000 , but less than $10 , 000 . The City Council
shall have such authority with regard to any general account
receivable for which the balance due the City is equal to or in
excess of $10 , 000 .
PROCEDURE
Where the amount of the City' s claim is less than $ 10 , 000 , Fi-
nance staff will submit an Interdepartment Communication to the
City Manager or the Director of Finance, depending upon the
amount due , detailing the facts , alternatives , and recommendation
for clearance. This document will contain language allowing the
City Manager or Director of Finance to sign , indicating agreement
or disagreement with the recommendation . Were the City Manager
or Director of Finance to disagree with the staff recommendation ,
/`O MnM1
CITY OF REDDING, CALIFORNIA
COUNCIL POLICY
. SUBJECT RESOLUTION POLICY EFFECTIVE PAGE
UNCOLLECTIBLE GENERAL ACCOUNTS NUMBER NUMBER DATE
•
RECEIVABLE 91-482 410 11/05/91 3
an alternative course of action would be recommended to Finance
staff .
Where the amount of the City' s claim is equal to or in excess of
$10 , 000 , the Director of Finance will submit a report to the City
Council containing a request for write-off and detailing the
facts supporting such a recommendation . The City Council' s
agreement or disagreement with such recommendation will be record-
ed in City Council minutes .
Following approval , the account balance will be adjusted to zero.
•
CR 0049