City of Ottawa claims credit record will be corrected if old fines are paid

The City of Ottawa says the debt collection agency it contracted to recover tens of millions of dollars in unpaid debt has confirmed that if residents who recently took a hit to their credit scores pay up, their credit report will be corrected.

The collection agency has also confirmed to CTV News Ottawa that once someone pays off their account, all credit scores will be updated to reflect the paid status.

CTV News Ottawa first reported this week that numerous residents recently woke up to lower credit scores linked to unpaid fines, such as parking tickets or water bills, that date back decades.

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The City claims those who pay what is owed will see the unpaid fines removed from their credit report.

"When all debts are collected by a private collection agency, the agency will report the item as paid through their regular reporting cycle and remove it from the credit report," a memo to city council that was distributed to the media on Thursday said.

While the City claims it has routinely sent unpaid debts to collections agencies for more than 20 years, it said the collection agency that was most recently contracted, Financial Debt Recovery (FDR), chose credit bureau reporting as its collection method.

"Credit bureau reporting is a legal method and is widely used as a tool by financial institutions, lenders, and creditors to collect unpaid amounts. This can be an effective method when agencies are unable to contact the individual responsible for the debt," the memo said.

Residents who spoke to CTV News said they were never contacted about the unpaid fines before their credit scores were affected. Many claimed they didn't know they had a bill or fine to pay. The City placed the onus on residents to keep their contact information up-to-date.

"It is the responsibility of the public to update their address and contact information with the Provincial Offences Courts if they have outstanding offenses and the City," said deputy treasurer Joseph Muhuni. "Of note, a conviction for a set fine under the Provincial Offences Act has no statute of limitations."

The City says it does write off uncollected debts in cases of death, dissolution or lack of documentation, but Provincial Offences Act fines cannot be written off.

The City says FDR reported 103,000 unpaid Provincial Offences Act fines and 3,000 unpaid water bills to the credit bureau, potentially impacting tens of thousands of people. The City says it doesn't know how many individuals were affected because some people might have multiple tickets. The total amount the City is seeking to reclaim is $85 million in outstanding balances and $50 million in Provincial Offences Act parking offences convicted by the courts, the memo says.

The City says anyone who received a collection notice or who had an item placed on their credit report by the third-party collection agency for outstanding arrears with the City can call Financial Debt Recovery at 1-877-300-9585 to make payment arrangements.

"FDR has confirmed to the City that paid debts are removed from credit records," Muhuni wrote.

In a followup email, Muhuni said it is up to FDR to inform the credit bureau.

"The credit bureau does not play a role in removing debts from credit reports. FDR determines which debts are removed and is responsible for withdrawing paid debt from credit reports. After a payment is received, FDR will inform the credit bureau," he said.

FDR said in a statement reporting to credit bureaus takes place on a daily basis. 

"I want to assure you that we are actively engaged in addressing inquiries and resolving any disputed accounts regarding Ottawa customers, be assured all inquiries are being handled diligently," said O. Michael Famutimi, legal counsel and compliance officer with FDR. 

"Currently, we are working closely with both the City of Ottawa and our internal departments to ensure that all concerns are handled in a timely and professional manner. Our goal is to resolve any issues swiftly and efficiently, maintaining the highest standards of customer service."

--With files from CTV News Ottawa's Leah Larocque.