Nebraska’s evicted public housing tenants often face another hurdle: The debt collector

The eviction notice came as a shock to Crystal Hoss. The single mother of four was only $250 behind on rent and thought she had more time to catch up. 

Hoss had been excited to restart her life in Omaha’s public housing when she moved from her native western Illinois into a Southside Terrace row house in 2022.

A year after she settled in, the eviction sent Hoss and her children back on the familiar journey down Interstate 80 – back to Illinois – in a U-Haul truck stuffed with all the belongings they could fit. 

The abrupt return to Illinois was disruptive for the family: three of Hoss’ kids had to transfer to new schools midsemester.

But Hoss didn’t feel the full effect of her eviction until eight months later when a phone alert from Credit Karma informed her that a new debt in collections had dropped her credit score.

Her debt to the Omaha Housing Authority had ballooned to $1,372 – unpaid rent and a charge for left-behind furniture, she believes – by the time it appeared on her credit report.

Hoss worries the hit to her credit could hurt her chances of finding housing in the future.

“It ruined a lot of stuff in my life,” Hoss said. 

She’s hardly alone. Between 2019 and 2023, OHA referred at least 284 former tenants’ debts to Credit Bureau Services, a Fremont-based collection firm that often pursues lawsuits against debtors. OHA received up to 60% of any cash recovered by the company.

Omaha’s public housing agency is doing this, as are a couple others in Nebraska, even as subsidized housing providers elsewhere in the Midwest have moved away from the practice.

Advocates contend that turning evicted public housing tenants over to debt collectors adds insult to injury for extremely poor renters. Debts in collections could follow an ex-tenant for years and hamper their ability to find housing and financial stability, they said.

“Debt collections and evictions are both pretty harmful to anybody going through them. To have those things paired from the public housing authority … is disappointing,” said Erin Feichtinger, a lobbyist for the Women’s Fund of Omaha.

OHA leaders say the U.S. Department of Housing and Urban Development encouraged the local agency to start referring ex-tenants to collections several years ago.

HUD spokesman Brian Handshy said there is no federal policy or directive requiring OHA to use a debt collection agency. The decision to employ the practice is “at the sole discretion” of a public housing agency’s leaders, he said.

Earlier this month, OHA switched to a new debt collector, Omaha-based Clear Recovery, that will not report ex-tenants’ debts to credit bureaus, said OHA CEO Joanie Poore.

“While OHA is expected to collect on debts owed, we do not wish to adversely affect the credit of tenants while doing so,” Poore said. 

The pursuit of pennies on the dollar

Minutes before Courtroom 20 becomes Omaha’s eviction epicenter, lawyers representing debt collectors cycle before a judge seeking the ability to garnish wages and bank accounts. 

OHA didn’t always send former tenants to a collection agency. The practice arose after a damning audit and a subsequent HUD review found financial shortcomings at OHA during the 2010s. 

HUD required OHA to make changes, and in early 2019, the two agencies agreed on several new measures, including more robust debt collection, said Poore, who arrived at OHA a few months later. 

“We weren’t doing it (debt collections) for a really long time. I don’t think anyone here really wants to do it. I view it actually as pretty staff-intensive and worthless from a perspective of business,” said OHA attorney Brian Hansen during a November interview.

“The problem is that when we weren’t doing it, HUD comes in and says, ‘Oh, you’re bad. You’re not sending people to collections,’” Hansen said.

In 2023, OHA referred 106 former tenants to Credit Bureau Services for collections. OHA doesn’t know how much money it recovered through debt collection, but the agency writes off hundreds of thousands of dollars in tenant debts every year, Poore said.

Nebraska’s second biggest subsidized housing agency also refers ex-tenants to collections – on a much smaller scale.

Last year, the Lincoln Housing Authority sent 16 ex-tenants owing about $30,000 to debt collection firm Credit Management Services. Of that amount, about $1,100 has been recovered – and only $700 went back to LHA. 

LHA Director Chris Lamberty said making diligent efforts to collect tenant debts is a good management practice, adding that the agency tries to set up monthly repayment plans with debtors before referring them to the collection agency. 

The west Omaha-based Douglas County Housing Authority did not send any ex-tenants to collections last year, but it has referred at least two evicted residents to Credit Bureau Services since 2019, according to court records reviewed by the Flatwater Free Press. (Editor’s note: This information has been updated.)

“Every dollar that the housing authority does not collect that is owed to them is a dollar we don’t have to help another family,” said Section 8 and Public Housing Director Beverly Valasek.

Many former public housing tenants are judgment-proof, meaning they don’t have money or assets for a debt collector to seize when a court order requires payment. 

But a debt in collections can still be financially burdensome for ex-tenants – a stain on their credit makes it even harder to find housing for a renter with an eviction already on their record, said Marybeth Shinn, a professor at Vanderbilt University’s Department of Human and Organizational Development.

Plunging ex-tenants further into the cycle of poverty is both morally questionable and financially senseless if housing authorities are only able to recover pennies on the dollar, Feichtinger said.

“I’ve got to believe the return on a payment plan is better than taking your tenants to collections,” she said. “Punitive measures don’t really ever make sense in these cases to me.”

The Chicago Housing Authority doesn’t use a collector because a debt in collections can hinder former tenants’ access to resources and benefits that require a credit check, said spokesman Matthew Aguilar. 

Public housing agencies in Des Moines and Kansas City, Missouri, no longer use collectors because they have found the practice ineffective for recouping debts. 

“You’re sending a debt collector to go after someone who simply cannot pay. What’s going to be my success rate?” said Edwin Lowndes, director of Housing Authority of Kansas City.  

Both agencies say they have found more success by having tenants repay their debts when they reapply for subsidized housing. Kansas City’s agency also has the option to garnish debtors’ state tax refund.

Jasmine Frampton barely made it six months in Southside Terrace before OHA evicted her over $225 in unpaid rent and security deposit charges.

Even during the brief duration of her lease, Frampton mostly stayed with relatives after finding a bug infestation at the row house OHA assigned to her, she said.

The mother of three boys had no income, and in hindsight, she feels the agency doomed her from the start by failing to inform her of a rent exemption that could have prevented the eviction.

A couple of months after she got the boot, Frampton received a letter from OHA that said she owed the agency $725, including a $200 court fee.

Frampton said she hasn’t been put in collections for her debt to OHA, but she worries that outcome would put more strain on her family.

It’s good that the agency switched to a debt collector that doesn’t refer to credit bureaus, but people who never knew of their right to apply for a rent exemption shouldn’t owe anything, she said.

“It’s crazy that they do people like this when we’re going through difficult times,” Frampton said.

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