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Fair Debt Collection: 14.6.6.1 Publicizing Indebtedness; Deceptive Implication That a Collector Is a Credit Bureau

The FDCPA prohibits a debt collector from publicizing consumers’ indebtedness unless done in compliance with the FCRA.440 Also, a debt collector may not use a name that deceptively implies that the collector is a consumer reporting agency, for example, a name with the words “credit bureau.”441 More broadly, it prohibits the use of any “false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by [the FCRA].”

Fair Debt Collection: 14.6.6.2 Disputed Debts and the Verification Process

A debt collector who receives a written dispute during the thirty-day verification period after its initial communication with the consumer must cease all collection activity until it provides the required verification.443 Since reporting the debt to a CRA is collection activity, it may be that the debt cannot be reported to a credit bureau until after the requested verification is provided.444 Even after verification is provided, the debt remains known to the collector to be disputed.

Fair Debt Collection: 14.6.6.3 Threatening to Report Debt

False threats to report the consumer to a CRA are, like all false threats, prohibited by the FDCPA446 and sometimes by state debt collection statutes447 or consumer protection acts.448 A lawyer who reports a client’s nonpayment of a fee to a CRA may be in violation of the confidentiality requirements of the rules of professional conduct.449

Fair Debt Collection: 14.7.1 Overview

Consumers sometimes run into problems in connection with payments to debt collectors. The collector may have initiated a payment that the consumer did not authorize or expect. The collector may be repeatedly submitting a bounced payment, triggering nonsufficient funds fees. Or the consumer may wish to stop recurring payments. In addition to the specific FDCPA rules governing post-dated checks,456 other laws give consumers rights.

Fair Debt Collection: 14.8 Discriminatory Collection Tactics Based on Race, Other Prohibited Categories

Collection tactics may involve invidious discrimination. Such tactics could include the use of derogatory race or gender epithets in a collection call, or differential policies regarding renegotiation of credit terms. Generally speaking, the party attempting to collect a debt will either be the creditor or a third-party debt collector. The Equal Credit Opportunity Act (ECOA)487 forbids discrimination by creditors, while the FDCPA covers debt collectors.

Fair Debt Collection: 14.10.1.1 Scope of requirement

The Internal Revenue Service is required by section 6306 of the Internal Revenue Code (IRC) to outsource the collection of certain federal tax debts to private collection agencies (PCAs). The IRS must enter into one or more “qualified tax collection contracts” with PCAs for the collection of “inactive tax receivables.”562 The IRS is required to contract with at least one of the PCAs on a list of companies designated by the Treasury Department for the collection of federal debts.563

Fair Debt Collection: 14.10.3 Protection for Taxpayer Rights

Any contract between the IRS and a PCA must prohibit the PCA from committing any act or omission that IRS employees are prohibited from committing in the performance of similar duties.586 These prohibitions include communicating at inconvenient times and places; contacting represented debtors (with certain exceptions); calling the debtor at work if the PCA knows the debtor’s employer prohibits such calls; and various other types of harassment and abuse.587

Fair Debt Collection: 14.10.4 Remedies for Violations by Private Collectors

The Internal Revenue Code (IRC) includes a civil remedy against a debt collector who recklessly, intentionally, or negligently disregards any provision of the tax code or any regulation under it.599 The taxpayer has the right to bring suit in federal court for “actual, direct economic damages,” with a cap of $1,000,000 ($100,000 in the case of negligence), plus costs.600 Unlike suits when the misdeeds are committed by IRS employees, the plaintiff need not exhaust administrative remedies.

Consumer Bankruptcy Law and Practice: 4.7.3 Modification

It is often possible to modify the plan, under the provisions discussed above, to accommodate new problems as they arise.122 The payments under the plan may be reduced, or even terminated, if the plan, as modified, still complies with the requirements of chapter 13.

Consumer Bankruptcy Law and Practice: 4.7.5 Dismissal

Occasionally, dismissal may be preferable to any of the other options. The debtor may at any time obtain dismissal as of right unless the case was previously converted from another chapter.131 This route may be particularly attractive if it appears that the case may be converted to chapter 7 against the debtor’s will and if the debtor has nonexempt property that they do not wish to see liquidated.

Consumer Bankruptcy Law and Practice: 4.8 Discharge

The final step in a successfully completed chapter 13 case, or in one ended under the hardship provisions,134 is the discharge. A discharge must be granted by the court “as soon as practicable” after completion of all payments under a confirmed plan.135 However, there are several other prerequisites that must be met to obtain the chapter 13 discharge.

Consumer Bankruptcy Law and Practice: 5.1.2 Roles for Non-Attorneys

As will quickly become apparent, most of the tasks involved in preparing a bankruptcy case for filing can be ably accomplished by non-attorney legal workers with a relatively small amount of training. This situation presents a significant advantage to busy offices. Of course, an attorney involved in a case prepared by non-attorneys must supervise and take ultimate responsibility for handling the case. The attorney should review the case prior to filing and at various points thereafter, with particular attention to ascertaining that non-routine circumstances are handled properly.

Consumer Bankruptcy Law and Practice: 5.3.1 The Initial Interview

The steps necessary to assure complete information will vary somewhat from case to case. For example, if no real estate is involved, a title search might not be necessary; if a client has clearly kept organized and complete records, counsel may often rely upon them with little risk.

Consumer Bankruptcy Law and Practice: 9.4.7 Non-Automatic Stays

None of the inclusions or exceptions to the automatic stay in any way limits the general injunctive power of the court, under section 105(a) of the Code, to stay other actions.289 Thus, if the automatic stay is found to be not applicable to a criminal proceeding based upon a bad check, the court may nonetheless be persuaded that the purpose of the action is really to collect the liability and thus to circumvent the bankruptcy.

Consumer Bankruptcy Law and Practice: 9.6.3.1 Giving Notice

An issue in some cases is whether the creditor has received actual notice. For damages to be available, the debtor must prove notice of the stay to the party enjoined.327 A telephone call or fax to a creditor or its counsel provides such notice,328 though later problems of proof could arise when the notice is not in writing.