Michigan

Be careful of bad blog advise about Fair Debt Collection Practices Act violations

I follow a number of blogs. There is a great deal of good information on the web that keeps me current about the state of the law. Unfortunately, there are also a number of quacks that spew baseless information with such authority that one might be lulled into believing its true. I found two such nuggets this morning. I won't mention the blog by name, but I will tell identify the two statement the author has put forth that are simply wrong. He states:

1. If a debt collector insists on payment in full (as every decent collector does), he violates the Fair Debt Collection Practices Act when he refuses to take payments even though he is authorized to do so.

RESPONSE: WRONG. The debt collector may be authorized by his client to accept a payment plan from the debtor, but that does not mean that he has to negotiate one. In fact, most clients simply give their debt collectors some blanket authorization and direct the debt collector to use her discretion to make the best deal possible. In short, just because a collector has the authority to accept a payment plan does not mean that he is required to make one.

2. If a debt collector sends the debtor a notice that refers to a Form 1099, the debt collector has per se, violated the FDCPA because the IRS is not involved.

RESPONSE: WRONG. In fact, when a debt is compromised from its original balance, the IRS has recently required that the collector issue a 1099-C for the difference between the debt as owed and the balance for which it was settled. These rules came about a few years ago and affects both the creditor who has a duty to report debt forgiveness over $600 and debtors who now have to report the debt reduction.

While there is a lot of good information on the 'net, there is also a lot of bad information as well. Just beware of the source of the information to see if its reliable and if the author has the credentials that would give you faith in what he says.

Full post as published by Michigan Collection Law Blog on October 28, 2007 (boomark / email).