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Municipal scraps recycling is getting  common in nowadays because, in most countries plastic recycling is compulsory.
 
And here some description of a mix-plastics recycling line with all the good and bad parts of it.
 
 

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Here I'll be talking about the light fraction of municipal plastic waste.
What normally happens after all plastic is collected, is separation of bottles (PET and LD/HDPE), crates, toys and all heavy items from films.
This "film" is mainly LDPE from shopping bags and packaging, heavy printed PP from packaging as well, foamed and not PS trays, some PET and HDPE bottles left.
And now the worse part of it: fabrics, sock, cleaning pads and......you name it.
This to tell you this is a challenge and to get a good material out of it, it's kind of difficult and sometimes, mainly for economical reasons, impossible.
The reason is simply because textiles like cotton, wool etc, will go all the way to the filter, together with cleaning pads, that are quite many, expanded and foamed plastics will float together with PE, PP and all good material.
As far as washing, there are not many problems but a good, effective separation is almost impossible.
If final product can be a pellet for injection molding or, in other words, filtered with a 0,5 mm. screen, no problem, but trying to go under this, can be very difficult.
Unless to work a lot with filtration after melting.
For a more detailed description of the process please click HERE