Court Opinion

ID: 3459871
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:27:18.544095+00
Date Added: 2024-06-11T13:52:56.617924
License: Public Domain

Dear Mr. Gallagher:
You requested an Attorney General's opinion regarding the authority of a municipal government to contract with a third party for the collection of debts owed to the municipal government. Specifically, you question whether an incorporated municipality has the authority to enter into a professional services contract with a private third party for debt collection services.
We note that in Attorney General Opinion No. 02-0232, we opined that the Town of Simmesport could contract with a collection agency to collect debts owed to it pursuant to La.R.S. 9:3576.6, which dealt with the regulation of collection agencies, and allowed municipalities to utilize collection agencies licensed and bonded under the Collection Agency Regulation Act. This statute was subsequently repealed by Act 638
of the 2003 Regular Session of the Louisiana Legislature. However, the municipality did not derive its authority to contract with collection agencies from this statute. Municipalities have general corporate powers, including the power to contract for services. R.S. 9:3576.6 merely dictated which collection agencies (those that were licensed and bonded) a municipality was authorized to contract with. Because the Collection Agency Regulation Act was repealed, those restrictions are no longer in effect.
We note that, Article VII, Section 14(A) of the 1974 Louisiana Constitution generally prohibits the loan, pledge and/or donation of public funds, credit and property to any person, association or corporation, public or private. Previous opinions of this office have determined that this constitutional provision requires public bodies to exercise reasonable means to recover erroneous payments, overpayments and other debts owed to the public body. Attorney General Opinion Nos. 05-0227, 05-0112, 03-0444; 01-63; 88-169. The use of a private third party for debt collection services to recover amounts owed to a municipality would seem to be a reasonable means to recover such amounts. Therefore, it is our opinion that municipalities may contract with private third parties for debt collection services.
  Trusting this adequately responds to your request, we remain *Page 2
Yours very truly,
 CHARLES C. FOTI, JR.
 ATTORNEY GENERAL
  BY:__________________________
 KENNETH L. ROCHE, III
 Assistant Attorney General
  CCF, JR/KLR, III/crt