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The fact that you are claiming this is 4 years old is not adding up.
Is this the first time you ever got this bill?
Is it just a small amount like $30 for a short period for arrears that someone forgot to pay?
If this is the first time the billed you for this oversight, they aren't going to threaten collections.
I would 100% call the water company directly for clarification.
There is something missing from your story.
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