PORTLAND, Ore. — Trayla Lomax felt defeated. The single mother of three, who survived domestic violence, was barely getting by. She worked part time, received food stamps and lived paycheck to paycheck.
Then, the city of Portland came to collect.
A judge ordered Lomax to pay $5,028 in damages after a 2013 crash with an unmarked police car. She and her family didn’t have that kind of money.
“At that time, unbeknownst to them, we were homeless. It was hard. Really, really hard,” Lomax explained.
Despite her clear inability to pay, the city sent Lomax to a private debt collection agency. The consequences were significant.
The amount Lomax owed grew quickly because the collection agency tacked on hundreds of dollars in interest and fees. Additionally, her credit score took a hit, making it more difficult for Lomax and her three children to find an apartment.
“It put a lot of barriers and boundaries in front of me when I was applying to move into places, applying for jobs, get a car,” Lomax said. “It was a big strike on my credit.”
Since 2015, the city has turned over more than 157,000 delinquent accounts to a private, third-party collection agency with little regard for how much is owed or if the person can pay. In some cases, residents who fell behind as little as $25 were sent to collections.
“It’s just creating a bad domino effect, a downhill spiral for people that are trying to accomplish better things financially,” said Lomax.
The aggressive tactics used by city hall to force people to pay up may be undermining Portland’s own effort to keep residents housed, employed and able to meet their essential needs.
“Debt collection is an area where we’ve seen the city go after vulnerable people and it ends up being counterproductive,” said Margie Sollinger, the city’s ombudsman. “It’s not a humane system in the way we are approaching it.”
Sollinger took a closer look at the city’s practices after hearing about Lomax’s case. She found the city’s effort to use a private collection agency against Lomax was punitive. Lomax clearly didn’t have the money, even to make a small payment.
Portland has no clear, citywide policy on when accounts should go to collections. It’s up to each city program or bureau to establish their own rule.
For example, after several warnings the revenue division sends residents to collections if they owe $100 or more. But the water bureau refers closed, delinquent accounts for much smaller amounts. The water bureau also handles accounts for the Bureau of Environmental Services.
“We care about people who struggle to pay their bills,” said Jaymee Cuti, a spokesperson for the water bureau. “We are reviewing our threshold for collections with our commissioner.”
City Commissioner Amanda Fritz oversees the Portland Water Bureau. Her chief of staff Tim Crail said Fritz believes sending someone who owes less than $50 to collections is inappropriate. She has asked the bureau to change the practice, Crail said.
He said Fritz also asked bureau leaders to review their collection practices overall and consider options that could improve the system.
The city’s contract with private debt collection agency Ray Klein, also known as Professional Credit Service, is not unusual. Many government agencies outsource the work of debt collection. By allowing private companies to charge fees and interest, cities like Portland get the services free of charge.
A review of court records shows, since January 2019, Ray Klein has filed 1,092 cases in Multnomah County Circuit court on behalf of various clients including the city of Portland, hospitals and private companies.
It’s unclear if this practice is effective. Since 2015, the city of Portland has referred more than $32.8 million in unpaid bills to Ray Klein for collection, according to city records. Of those unpaid funds, roughly 15% has been recovered.
She hopes the city of Portland will provide other vulnerable residents with the same opportunity by focusing its private collection referrals on those who can afford to pay, instead of those who can’t.
If you have a suggestion for an investigation, or want to blow the whistle on fraud or government waste, email CallKyle@kgw.com.