Bailiffs forced a Birmingham City Council driver off the road and repossessed his van in a scene described as being "like an American TV cop drama".
Colleagues say the driver has been left traumatised by the incident, blamed on the problems surrounding the council's new Voyager computer system.
The council has admitted that 18,000 debts are overdue and now angry suppliers are losing patience.
In one case, a company decided to claim back a lease hire vehicle used for ferrying mail from one building to another and sent in a recovery team.
On Monday last week, they flashed the van driver with their headlights then blocked him in at the Paradise Circus traffic lights.
A man then leapt out of the recovery truck, opened the driver's door and took the keys. "He didn't know who they were, and was afraid for his life. He thought they were going to mug him for the contents of the van. As it was, they ordered him to get out then unloaded the mail which was in the back, and handed it to him on the side of the road.
"There were all kinds of personal data and confidential information in there, and he pleaded with them to take him back to the office. When they saw how upset he was, they agreed.
"He's really been traumatised by the incident and says it's been playing on his mind.
"His wife was in tears when she heard and now the other drivers are concerned the same thing might happen to them."
The man's identity has not been revealed, but he works for the Children, Families and Young People's department in Margaret Street.
We've also discovered council staff have had free use of a car park in Newhall Street suspended because operators NCP haven't been paid. The new system has been blamed.
Voyager was introduced as part of a Business Transformation Programme managed by private contractors Capita, expected to generate savings of £600 million in ten years.
Glyn Evans, the council officer overseeing Business Transformation, said the incident happened over "a relatively small amount of money". He added: "We are speaking to the firm because we don't think the way their bailiffs behaved is acceptable."