Can debt collector call friends and family?

Q: I co-signed on a car in 2007, which was repossessed. The loan was forgiven in 2012 and reported on my taxes as income. The taxes have also been paid to the IRS. As of this past Friday, two of my friends/family listed as “referrals” were called about this “forgiven debt.” No one has contacted me. Any advice would be greatly appreciated. — Lynn

A: This should not be happening, but there is something you can do to stop it.

You have two issues here that need to be addressed. First, you have a collector who is attempting to collect a forgiven debt, and second, the collector may be violating the Fair Debt Collection Practices Act, or FDCPA, by overcommunicating to third parties.

Let’s start with the second issue.

The FDCPA protects consumers from abusive and unfair collectors. It has specific rules that collectors must follow when communicating with a third party in order to attempt to collect a debt. The collector may state only that he or she is “confirming or correcting location information concerning the consumer,” and may not “state that such consumer owes any debt.” If the collector identified himself as a debt collector and/or said anything about a debt in the message left for your friends and family, the debt collector is in violation of the FDCPA and can be sued.

I suggest that at a minimum you report the violation to the Consumer Financial Protection Bureau and also with the consumer protection division of your state’s attorney general.

Should the collector ever get around to contacting you about this forgiven debt, be prepared to send copies of your 1099-C tax form and the tax return where you paid the taxes on the forgiven debt. You should be aware that many consumers have had similar problems with a collector attempting to collect on a debt for which the consumer has been issued a 1099-C and has paid the taxes owed. The courts have decided in favor of consumers and stated that a creditor cannot issue a 1099-C and then attempt to collect the same debt that was forgiven. But with the huge volume of stale debts being sold and resold in the secondary market, this has not stopped all collection attempts.

Steve Bucci, is the former president of Consumer Credit Counseling Service of Southern New England and the author of “Credit Repair Kit for Dummies.”

More in Herald Business Journal

Voters are on the sidelines as the port fills a vacant seat

Troy McClelland resigned from the Port of Everett commission too late for an election before 2019.

In space capsules today, little room but big improvement

Boeing and SpaceX are relying on a tried-and-true design as they each develop new spacecraft.

First Boeing KC-46 delivery to Air Force slides into 2018

Certification milestones have been missed, and problems have emerged in flight test, a source says.

Newest must-try eatery: 85°C Bakery Cafe in Lynnwood

The popular bakery, part of a Taiwan-based chain, is already drawing out-the-door crowds.

Snohomish County tax liens

Tax liens are gathered from online public records filed with the Snohomish… Continue reading

Trudeau: Canada could stop dealing with Boeing over dispute

Boeing had petitioned the U.S. to investigate government subsidies of Bombardier’s CSeries aircraft.

Toys ‘R’ Us files for bankruptcy but keeps stores open

Retailers of all kinds are struggling. Toys ‘R’ Us is among at least 18 other bankruptcies this year.

Marysville-Arlington fiber-optic link planned by Comcast

The high-speed internet line, to be ready next year, is seen as a boost for business development.

‘Cheese that was grass 24 hours ago’ wins a farm accolades

Ferndale Farmstead specializes in authentic Italian cheeses — made with with American milk.

Most Read