Facing Shortfalls, Calling In Old Debts
Consultant Mike Ginsberg said the government put out over 80 collection contracts from April to June.
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I got to know Marvin Kaulkin by smoking an occasional cigar together at Bethesda Tobacco, a popular spot in lower Montgomery County.
His Rockville firm, Kaulkin Ginsberg, has 25 employees and advises collection agencies on how to improve their businesses. Clients include Sallie Mae, TRW and GE Capital, according to its Web site.
With the economy tanking and banks freezing up, I called Kaulkin Ginsberg and chatted with President Mike Ginsberg (Marvin probably was enjoying a smoke nearby) about what he is seeing in the marketplace.
Ginsberg said that although the current credit crisis and subprime mortgage debacle are creating pain throughout the United States and the rest of the world, they're creating opportunities as well. Asset recovery is Kaulkin Ginsberg's specialty. In other words, debt collection.
"With the changes on Wall Street, with the bank bailout and the U.S. government taking ownership rolls in the nine largest banks, it's inevitably going to mean a lot of business to us," he said. "There's going to be increased recovery efforts, which will keep Kaulkin Ginsberg busy."
Ginsberg said the Washington area's lower unemployment rate means most people are paying their bills -- so far. "My sense here locally is that unlike other areas, people are staying in their houses and we are seeing less foreclosures locally," he said.
But, he added, "if the recession continues to grow, it's going to start negatively impacting the Washington community."
The public sector is already reeling. State and local governments are having a tougher time borrowing cash, meaning something in their budgets has to give.
"When governments, especially at election time, are faced with a choice of cutting spending, raising taxes or collecting past-due debts, I am quite sure many will choose what's behind door number three," Ginsberg said. "In fact many state and local governments are already turning to collection agencies."
More than 80 collection contracts were put out for bidding from April through June, he said.
Then he gave me some specifics about the Washington region.
Prince William County's Department of Finance Tax Administration is reviewing contractor proposals to collect some $1.3 million in delinquent tax accounts. Virginia state law says the county may use private collection agencies to collect any local taxes other than certain real estate taxes.
