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CHAPTER 1-55

OBLIGATION RECOVERY CENTER

1-55-1    Definitions.

1-55-2    Obligation recovery center created.

1-55-3    Collection of bad debts.

1-55-4    Cost recovery fees.

1-55-5    Transfer of recovered moneys to referring entity--Proration of insufficient amounts--Order of debt collection.

1-55-6    Use during account receivable cycle.

1-55-7    Final notification to debtor by referring entity.

1-55-8    Confidentiality of records.

1-55-9    Collection and use of data.

1-55-10    Centralized electronic debt management system.

1-55-11    Licenses, registrations, and permits withheld from person owing debt referred to center.

1-55-12    Hearing on debt determination dispute--Temporary license, registration, or permit.

1-55-13    Payments due debtor subject to offset against debt referred to center.

1-55-14    Referral of debt to debt collection agency.

1-55-15    Promulgation of rules.

1-55-16    Annual report to Government Operations and Audit Committee.

1-55-17    1-55-17. Repealed by SL 2015, ch 14, § 17, eff. June 30, 2017.


1-55-1. Definitions.

Terms used in this chapter mean:

(1)    "Account receivable cycle," the period of time, not to exceed one hundred eighty days, during which the center may attempt to collect on a debt before the debt is forwarded to any collection agency in accordance with § 1-55-14;

(2)    "Center," the obligation recovery center;

(3)    "Debt," a legal obligation to pay money, including any principal, any interest that has accrued or will accrue until the debt is paid, any penalties, any costs, and any other charges permitted by law. The term also includes any obligation of any kind referred to the center for collection by any agency of the state, the Unified Judicial System, the Board of Regents, a technical college supported by the state under § 13-39A-42, or a constitutional office;

(4)    "Debtor," a person who is indebted to the state or a state agency for any delinquent accounts, charges, fees, loans, taxes, or other indebtedness due the state, or any person that owes any obligation being collected by the center;

(5)    "Bad debt," any debt due an agency of the state, the Board of Regent's system, any technical college supported by the state under § 13-39A-42, or a constitutional office that is no longer subject to an administrative appeal or judicial review following an administrative appeal, or any costs, fines, fees, or restitution ordered in any adult criminal proceeding through the Unified Judicial System no longer subject to direct appeal under § 23A-32-2;

(6)    "Final notification," the notification provided by § 1-55-7; and

(7)    "Referring entity," the entity referring the debt to the state obligation recovery center for collection.

Source: SL 2015, ch 14, § 2; SL 2019, ch 13, § 1; SL 2020, ch 61, § 32.


1-55-2Obligation recovery center created.

There is hereby created the obligation recovery center, which is attached to the Bureau of Administration for budgeting and reporting purposes. The center is a central repository for identification, registration, oversight, and collection of debts owed to any agency or department of the state or to any postsecondary technical institute supported by the state under § 13-39A-42.

Source: SL 2015, ch 14, § 1; SL 2019, ch 13, § 2.


1-55-3Collection of bad debts.

The center shall work to collect each bad debt referred to the center during the account receivable cycle. The character of the debt in the hands of the referring entity does not change by the referral of the debt to the center for collection. Among other powers granted by this chapter, the center may:

(1)    Sue;

(2)    File liens;

(3)    Enter into payment agreements with debtors;

(4)    Impose a cost recovery fee;

(5)    Collect data for debt collection purposes;

(6)    Establish and maintain a centralized electronic debt management system;

(7)    Exercise settlement authority granted by the referring entity;

(8)    Setoff against any moneys to be paid by the State of South Dakota or any referring entity to a debtor;

(9)    Contract with multiple collection agencies for the collection of debt on behalf of the center;

(10)    Except for the debt collection powers vested in the Unified Judicial System, the center may use the referring entity's statutory collection authority to collect the bad debt owed to the referring entity; and

(11)    Utilize all debt collection methods authorized by state law.

The office may determine which method or combination is most suitable to collect the debt.

Source: SL 2015, ch 14, § 3.


1-55-4Cost recovery fees.

For any bad debt referred to the center for collection after July 1, 2015, the center shall collect a cost recovery fee in addition to the debt referred to the center for collection. The cost recovery fee is calculated by multiplying the principal amount of the debt referred to the center by twenty percent. All debt collection methods available to collect any bad debt referred to the center may be used by the center to collect the cost recovery fee. The cost recovery fee shall be deposited into the general fund and the operations of the center and shall be subject to the annual budgeting process specified in chapter 4-7.

Source: SL 2015, ch 14, § 4.


1-55-5Transfer of recovered moneys to referring entity--Proration of insufficient amounts--Order of debt collection.

The center shall transfer any other moneys collected from a debtor to the referring entity within thirty days after the end of the month in which the moneys were collected. If the amount collected is less than the principal amount of the debt referred to the center and the cost recovery fee imposed by this chapter, the amount collected shall be prorated between the principal amount of the debt referred and the cost recovery fee.

If more than one referring entity has referred a debt to the center regarding the same debtor, or if the same referring entity has referred multiple debts to the office regarding the same debtor, the center shall collect the first referred debt before proceeding to the collection of the subsequent referred debt in the order referred.

Source: SL 2015, ch 14, § 5.


1-55-6. Use during account receivable cycle.

The center may be used during the account receivable cycle by:

(1)    Any agency of the state to collect bad debt owed to the agency;

(2)    The Unified Judicial System to collect any costs, fines, fees, or restitution, constituting final debt, ordered in any adult criminal proceeding;

(3)    The Board of Regents to collect any final debt owed within the Board of Regents' system;

(4)    Any technical college supported by the state under § 13-39A-42 to collect any final debt owed within the technical college system; and

(5)    Any constitutional office to collect final debt owed to the constitutional office.

Source: SL 2015, ch 14, § 6; SL 2019, ch 13, § 3; SL 2020, ch 61, § 33.


1-55-7Final notification to debtor by referring entity.

Prior to transferring any debt to the center for collection, the referring entity shall provide a final notification to the debtor that the debt will be referred to the center for collection.

The final notification to the debtor may be sent by regular mail or by electronic means. The final notification shall contain all of the following:

(1)    The name of the referring entity;

(2)    Contact information for the referring entity;

(3)    The name of the debtor;

(4)    The nature of the debt;

(5)    The principal amount of the debt;

(6)    The total amount of the debt;

(7)    A statement that the debt will not be turned over for collection to the center until a time at least fourteen days after the date the final notification is sent to the debtor; and

(8)    A statement that if the debt is turned over to the center, a cost recovery fee of twenty percent of the principal, in the amount of $ ______, will be added to the total debt owed by the debtor to the referring entity.

Source: SL 2015, ch 14, § 7.


1-55-8Confidentiality of records.

All data, records, and files utilized for debt collection as provided for in this chapter shall be confidential and privileged, and no person may divulge or disclose any information obtained from such records and files except in the administration and enforcement of this chapter, or as otherwise required by law.

Source: SL 2015, ch 14, § 8.


1-55-9Collection and use of data.

The center may collect data for purposes of collecting any debt referred to the center. Notwithstanding any law to the contrary, referring entities are authorized to transmit data to the center deemed necessary by the center to aid in the collection of the referred debt and the center may share, request, and shall receive from any state agency any data to collect any debt referred to the center. Any information provided by a referring entity or a state agency may only be used for the purpose of collecting the debts referred to the center.

Source: SL 2015, ch 14, § 9.


1-55-10Centralized electronic debt management system.

The center shall establish and maintain a centralized electronic debt management system to compile the information provided by referring entities, to track the collection efforts for all debt referred to the center, to cross-reference and identify debtors for collection purposes, and to maintain all information provided or collected from all sources concerning addresses, financial records, and any other information useful to the center.

The center may designate a third party to establish and maintain the centralized electronic debt management system. Any such third party shall keep all information it obtains from any source confidential, and any employee, agent, or representative of that third party is prohibited from disclosing that information to anyone other than the center.

Source: SL 2015, ch 14, § 10.


1-55-11Licenses, registrations, and permits withheld from person owing debt referred to center.

No person that owes a debt that is referred to the center may renew, obtain, or maintain:

(1)    Any registration for any motor vehicle, motorcycle, or boat, in which the person's name appears on the title of the motor vehicle, motorcycle, or boat;

(2)    Any driver license as defined by subdivision 32-12-1(1); or

(3)    Any hunting license, fishing license, state park permit, or camping permit;

unless the debt and cost recovery fee is either paid in full or the debtor has entered into a payment plan with the center and payment pursuant to the plan is current.

Source: SL 2015, ch 14, § 11.


1-55-12Hearing on debt determination dispute--Temporary license, registration, or permit.

No agency, board, or entity of the State of South Dakota may issue, renew, or allow an individual to maintain any motor vehicle, motorcycle, or boat registration, driver license, hunting license, fishing license, state park permit, or camping permit, after receiving notice from the center that the applicant, registrant, or licensee has a debt that is being collected by the center, unless the applicant, registrant, or licensee has paid the debt and cost recovery fee in full or the debtor has entered into a payment plan with the center and payment pursuant to the plan is current.

An applicant, registrant, or licensee who disputes a determination by the center that the applicant, registrant, or licensee has a debt that has been referred to the center for collection shall, upon request, be given a due process hearing by the center. Upon recommendation by the center, the agency or entity may issue a temporary license, registration, certification, or permit to the applicant, registrant, or licensee pending final resolution of the due process hearing.

Source: SL 2015, ch 14, § 12.


1-55-13Payments due debtor subject to offset against debt referred to center.

Unless preempted by other law, any payment of any kind to be made to a debtor by the State of South Dakota or any referring entity, when the debtor has a debt that is referred to the center, is subject to offset by the center unless the debt and cost recovery fee is either paid in full or the debtor has entered into a payment plan with the center and payment pursuant to the plan is current.

Source: SL 2015, ch 14, § 13.


1-55-14Referral of debt to debt collection agency.

If the center is unable to collect any debt referred to it within the account receivable cycle, the center shall forward the debt to a collection agency or agencies for collection for a period of no less than one year, or as otherwise stipulated in the contract between the center and the collection agency. The debt collection agency shall be permitted to add a collection charge, not to exceed twenty percent of the debt, to the debt forwarded to the collection agency as payment for its collection services. The center or a collection agency may retain debt beyond the account receivable cycle or other applicable collection period if the entity is actively engaged in substantive collection efforts, or based on other good cause. The Bureau of Administration shall promulgate rules pursuant to chapter 1-26 concerning the process of contracting with and referring debt to debt collection agencies.

Source: SL 2015, ch 14, § 14.


1-55-15Promulgation of rules.

The Bureau of Administration may promulgate rules, pursuant to chapter 1-26, in the following areas:

(1)    Definitions;

(2)    Procedure for remitting moneys collected to referring entities;

(3)    Processes and procedures for entering into payment agreements with debtors;

(4)    A process for the imposition of the cost recovery fee;

(5)    The data collection system;

(6)    The centralized electronic debt management system;

(7)    The settlement authority process;

(8)    The procedure for sending information to the Division of Motor Vehicles concerning the nonrenewal of registrations for motor vehicles, motorcycles, and boats;

(9)    The procedure for sending information to the Department of Public Safety concerning the nonrenewal of driver licenses;

(10)    The procedure for sending information to the Department of Game, Fish and Parks concerning the nonissuance of hunting licenses, fishing licenses, state park permits, and camping permits; and

(11)    The setoff of debt process.

Source: SL 2015, ch 14, § 15.


1-55-16Annual report to Government Operations and Audit Committee.

The center shall annually report after conclusion of the prior fiscal year to the Government Operations and Audit Committee concerning the activity of the center including the number of debts referred to the entity, the annual amount and nature of the debt obligations recovered by the center, the number of debts referred from the center to private collection agencies and the results of those referrals, and the costs and expenditures incurred by the center.

Source: SL 2015, ch 14, § 16.


1-55-17
     1-55-17.   Repealed by SL 2015, ch 14, § 17, eff. June 30, 2017.


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