- Nephi City writes off $38,000 of bad debt
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By Myrna Trauntvein
Times-News Correspondent
A list of uncollectible utility bills was written off by Nephi City Council.
The bills, including penalties and interest, are $38,000. Just the utilities portion of the amounts owed comes to $15,400.
Penalties and interest have been added to the amount of services.
“In cases where protracted standard collection efforts have not resulted in payment of older utility accounts, those accounts will be declared uncollectible and will be removed from the city’s accounts receivable records,” said Randy McKnight, city administrator.
The current list was prepared by Blair Painter, city treasurer/recorder.
“This does not mean that we suspend our efforts to collect these past due accounts,” said McKnight.
Writing off the uncollected accounts is an accounting procedure.
“We have to pay for electricity and gas,” said Painter, “so we try to recoup those first.”
However, the write-off amount is one-tenth of 1 percent of all sales, said Painter. For example, 2,600 utility accounts were sent out last month.
Some of the accounts have already been taken to small claims court and the city, in each case, has prevailed.
“We have filed three garnishments,” said Painter.
Garnishment is a drastic measure for collecting a debt. A court order of garnishment allows a creditor to take money or payments from the debtor’s paycheck until the debt is paid. A garnishment action is taken against the debtor as defendant.
Garnishment is regulated by statutes, and is usually reserved for the creditor who has obtained a judgment, or court order, against the debtor.
Mark Jones, mayor, is also a banker, and said that those seeking loans must first, in order to obtain one, have cleared off such back utility payments. They will not be recommended for a loan if they have these payments still to be made.
“Utility deposits have been applied to reduce the payment owed,” said McKnight.
State taxes on the collections are not paid if the debt is not paid by the utility user, said McKnight.
“This is an accounting principle,” said Jones.
He said he commended the city staff for keeping the unpaid utility bills to the low rate they were at.
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