November 9, 2019 / 12:26 AM / 3 days ago

Warning about report to IRS may violate fair-debt law - 7th Circuit

Bill collectors could run afoul of the Fair Debt Collection Practices Act by warning a debtor that the creditor “may report” the transaction to the Internal Revenue Service if the creditor would not actually do so, a federal appeals court held on Friday.

Saying its precedent is “currently evolving,” the 7th U.S. Circuit Court of Appeals revived Mabel Heredia’s lawsuit against Capital Management Services over a dunning letter that warned: “Settling a debt for less than the balance owed may have tax consequences and Discover may file a 1099C form.”

To read the full story on Westlaw Practitioner Insights, click here: bit.ly/2K6H4xA

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