Alltran Financial, LP Knocked with Debt Collection Class Action

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The artist formerly known as United Recovery Systems, L.P., Alltran Financial, LP, is the defendant in an 11-page proposed class action over alleged Fair Debt Collection Practices Act (FDCPA) violations. The plaintiff claims the defendant sent him a “deceptive and misleading” collection letter that unlawfully stated the forgiveness of his debt needed to be reported to the Internal Revenue Service. The lawsuit argues that “it is highly improbably that for one who is in debt to have income as a result of settling a debt,” meaning such a discharge would not be considered reportable income by the IRS. The pertinent language, the lawsuit continues, could be misunderstood by the least sophisticated consumer to mean the IRS requires all forgiven debt to be reported, when this is not the case. Since the defendant chose to include this tax disclosure in its collection letter, the lawsuit claims, it had a responsibility to do so in a way that “would not mislead the least sophisticated consumer as to his or her tax consequences.”