They Are Pulling "A Madoff:"

Another Debt Collector Scam

Debt collectors resort to a lot of illegal tricks but the one I am going to tell you about here is really quite creative. It involves the use of IRS form 1099c. The two main culprits in this seem to be Asset Acceptance Corporation and Portfolio Recovery Associates. Both are infamous for being sued with regularity for violations of the FCRA and the FDCPA.

Basically these bottom feeders buy debts for pennies on the dollar that are well past the statutues of limitations in no matter which state you are in. The debts date back to the 1990's. After they buy the debts the amounts are inflated as much as possible and then charged off as losses even though there really is not any loss. 1099c's are then issued to the unsuspecting consumer. So the consumer essentially is getting a tax bill on a debt that is out of statute and which the debt scavenger absolutely has no prayer of verifying (validating the debt as prescribed by the Fair Debt Collection Practices Act).

According to one of the Attorney Generals, if the debt cannot be validated the 1099c cannot be filed. Do you think that is stopping these slime buckets? They are betting that you are an idiot and will just cave in under the pressure and pay or they will try to get some hefty tax deductions on all of the debts on which they are unable to collect.

Should you become a victim of this scam the very first thing you want to do is to serve the debt collectors with my demand for debt validation letter which you can obtain by opting in with your name and email address on by blog. I can promise you right now that they are not going to be able to validate the debt. Once you determine that to be the case you can then proceed to sue their sorry butts.

I recommend going to the National Association of Consumer Advocates (naca.net). They have a listing of qualified attorneys all over the US so it should not be difficult to find a lawyer relatively near where you live.