The interpretation of certain provisions of the FDCPA by consumer attorneys, Courts and regulators contain a number of “Catch-22” scenarios where a debt collector is potentially subject to lawsuits and regulatory actions regardless of what the collector does.
The latest iteration of this conundrum for debt collectors involves the disclosure of the tax consequences to a consumer for settling a collection account for less than the full balance. Debt collectors are required by a number of financial institutions to include these so-called “1099C” disclosures in debt collection communications. Unfortunately, the inclusion of these disclosures regarding tax consequences results in lawsuits against debt collectors. Perhaps most frustrating for debt collectors is that such disclosures are truly intended to assist the consumer, yet are misconstrued as efforts to deceive or confuse.
In this episode of the Debt Collection Drill audio blog, Moss & Barnett attorneys John Rossman and Mike Poncin examine the case law regarding “1099C” tax consequence disclosures by debt collectors and provide practical advice for navigating these difficult issues with creditor clients while complying with the law.