NJ Consumer Alleges Notice from Professional Bureau of Collections of Maryland Is Misleading

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A New Jersey consumer claims Professional Bureau of Collections of Maryland, Inc. mailed her a collection notice over a U.S. Department of Education obligation that offered misleading information concerning the reporting of settled debts to the IRS. In its notice, the defendant stated:

“Professional Bureau of Collection of Maryland is required to inform you, whenever more than $600.00 of debt is forgiven as a result of settling a debt for less than the balance owing, the Department is required to report the amount of the debt forgiven to the Internal Revenue Service on a 1099 form, a copy of which will be mailed to you."

The lawsuit argues the above statement is misleading in that it does not fully describe the “impact” of attempting to settle a debt for less than what the defendant claims the plaintiff owes. Moreover, the case charges that the defendant failed to denote the difference between principal and interest with regard to IRS reporting, and neglected to identify which portion of the balance due or proposed settlement amount is the actual underlying debt.

“The defendant is aware that a portion of this debt is fees and interest,” the complaint states, “but without a specific breakdown included on the letter, no accountant would be able to discern if there would be tax implications.”