Forgiveness of Debt Can Prove Unforgiving, But a New Federal Court Decision Gives Cause for Optimism

A federal court in New Jersey recently dismissed a putative class action filed under the Fair Debt Collection Practices Act, which had argued that it was deceptive conduct for a debt collector to inform the debtor that forgiveness of debt, in some circumstances, may be reportable to the Internal Revenue Service. The specific language included in the debt collector's letter was as follows: "We will report forgiveness of debt as required by the IRS regulations. Reporting is not required every time a debt is canceled or settled, and might not be required in your case." More ›