The price of collection

City spending thousands going after councilman’s debt
Dec. 17, 2013 @ 07:05 PM

High Point’s efforts to collect a decade-old debt from City Councilman Foster Douglas are costing taxpayers money.
Douglas filed for personal bankruptcy Monday, which put the brakes on the city’s attempts to collect a $32,000 federal judgment from 2003 against him and his brother, Jerry Douglas, who is also seeking bankruptcy protection.
The collection effort has been a money-losing proposition for the city so far.
The brothers have paid only $416.58 of the tab to date, and the city has spent $8,855.87 in attorney’s fees and other costs since September to try to recover the debt, which stems from the dismissal of a 2002 civil rights lawsuit the Douglases brought against the city.
The city is listed as one of 11 creditors in Douglas’ Chapter 13 bankruptcy filing. He claims that his liabilities total $159,035 and that he has assets of $102,720.
He proposes to pay $1,125 per month for five years to settle his debts.
“Now, it’s just really up to the bankruptcy judge to determine what the city’s payments will be,” said City Attorney JoAnne Carlyle. “The positive side is that the city might get some payment, after getting nothing in the past 10 years. Even if it’s some percentage on the dollar, we still might receive something that otherwise we would not have.”
Douglas’ bankruptcy petition lists his house at 309 S. Scientific St. as his only real property. It lists $10,720 worth of personal property, including two vehicles: a 1996 Toyota and a 1952 Plymouth.
Any other property he owns would be fair game for the city’s collection efforts, officials said.
“In the event there is any undisclosed property not protected by the bankruptcy, then we’ll pursue that,” said Carlyle.
Bruce Ashley, an attorney with Smith Moore Leatherwood, the Greensboro law firm with which the city has contracted to handle the collection efforts, said there’s a possibility Douglas may have ties to additional properties.
“We have received information that he has property in both Virginia and South Carolina,” said Ashley, who added that he has not established whether this is the case.
Douglas works for Health Partners Home Care in Hampton, Va., a business owned by his wife, some 280 miles from High Point, according to city records.
Court documents from Davidson County show that he was served with papers related to a child-support case in August at a home in Yorktown, Va. that York County, Va. tax records state is owned by his wife.
The records state that it is a 4,445-square-foot, five-bedroom home with a tax value of $622,900.
Douglas, who did not return phone and email messages Tuesday, also frequently drives a truck with Virginia plates to City Hall.
Prior to his bankruptcy petition, the city was looking to sell Douglas’ house as part of the debt-collection process. His filing states that he owes Bank of America $78,804 on his mortgage for the house, which is valued at $92,000. There are also state and federal tax liens on the house totalling $30,902, according to the petition.
That raises the question of whether the sale of the house would have generated any proceeds for the city, given the presence of the other creditors.
Carlyle said the city would have made the legal argument that it should have been paid before the bank from any sale of Douglas’ home, because the judgment against him predates the deed of trust for his house.
One tool the city won’t have at its disposal is pending state legislation that would allow cities and counties to withhold compensation from council members or county commissioners who have not paid a monetary judgment they owe the city or county they represent.
House Bill 346 unanimously passed the House earlier this year and is pending in the Senate. It could be enacted in May 2014 when the legislature next convenes.
As a council member, Douglas is paid $14,410 in annual salary and allowances. If the bills passes, however, it won’t enable the city to garnish any money from his council pay, because he sought bankruptcy protection before the measure would take effect, Carlyle said.