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

Health-care consumers need to take the lead, so get smart

David Russian, CEO of Western Washington Medical Group, writes our third essay about fixing health care.

More business, more competition for Everett kidney dialysis center

Nonprofit Puget Sound Kidney Centers sees large for-profit competitors enter state market.

Molina Medical holds fall carnival for families in Everett

Molina Medical is hosting a free event for families in the Everett… Continue reading

Leadership Snohomish County celebrates 20 years of service

Leadership Snohomish County is celebrating its 20th anniversary. The organization was launched… Continue reading

Snohomish, Monroe manufacturers honored for innovation, excellence

Two Snohomish County companies have been honored with Manufacturing Excellence awards at… Continue reading

Remodeled home tours planned this weekend

This weekend, Edmonds-based Chermak Construction will participate in the 2017 Remodeled Homes… Continue reading

Barron Heating to celebrate anniversary at Marysville showroom

Barron Heating and Air Conditioning is celebrating its 45th anniversary from 10… Continue reading

Robots on Wall Street: Slow-footed regulators lose ground

Watchdogs have to figure out how to check computers running lightening-fast algorithms.

US budget deficit hits $666B, an $80B spike for the year

The deficit issue has largely fallen in prominence in Washington in recent years.

Most Read