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New Rules For Nonprofit Hospital Lawsuit Cases

By Paul Kiel, ProPublica. Originally posted here. Republished here under a Creative Commons license.

Nonprofit hospitals get big tax breaks for providing care for patients who can’t afford it. Under new IRS rules, hospital lawsuit cases must take extra steps to inform poor patients that they may qualify for financial assistance.

Last month, ProPublica and NPR detailed how one nonprofit hospital in Missouri sued thousands of lower-income workers who couldn’t pay their bills, then seized their wages, all while enjoying a big break on its taxes.

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Can I Sue the I.R.S for Abusive Debt Collection?

Private debt collectors are subject to a variety of laws policing their collection of private debts. The Fair Debt Collection Practice Act (FDCPA) imposes clear and strict requirements on debt collectors – such as preventing them from shaming consumers into payment by publishing the names or calling their parents, preventing them from lying to consumers or threatening them with illegal behavior.

However, FDCPA applies only to consumer transactions and does not cover matters such as tax debts. Boyd v. J.E. Robert Co., 765 F.3d 123 (2d Cir. 2014); Beggs v. Rossi, 145 F.3d 511 (2d Cir. 1998). Federal employees are also specially exempted from the FDCPA. 15 U.S.C. § 1692a(6)(C).

So, what’s left to protect taxpayers?

Read More »Can I Sue the I.R.S for Abusive Debt Collection?

Frederick J. Hanna Associates To Pay $3.1 Million And Stop Filing Suits Without Proof

A proposed Consent Order has been filed in the CFPB’s enforcement action against Frederick J. Hanna Associates. This was the first enforcement action by the CFPB directly against a collection law firm and was the subject of a vigorous defense by Hanna and much comment in the trade press. Hanna lost its motion to dismiss in July 2015, made an unsuccessful motion for an interlocutory appeal and discovery was ordered to proceed.

The case attracted a lot of attention: from the Wall Street Journal to trade publication InsideARM which said that “[t]he case should be front and center for all law firms practicing in this space“. In light of the excitement about the case, the bottom line of the Consent Order is, rather disappointing: Hanna is to pay $3.1 million in penalties to the CFPB and agrees to injunctive relief(all without admitting any of the CFPB’s allegations). There is no relief for consumers targeted by Hanna – that is presumably left to private law suits.

Read More »Frederick J. Hanna Associates To Pay $3.1 Million And Stop Filing Suits Without Proof

Mortgages Discharged In Bankruptcy: Servicers Bombard Consumers With Confusing Disclaimers

Strong bankruptcy laws are part of America’s legal heritage. They allow people who make mistakes, or are just unlucky, a chance to start over by erasing their debts. Bankruptcy is not an easy process, since it involves either “liquidation” through Chapter 7 or several years in a Chapter 13 payment plan that takes up almost… Read More »Mortgages Discharged In Bankruptcy: Servicers Bombard Consumers With Confusing Disclaimers

FHA Won’t Reduce Your Mortgage, But it Will Sell it to Investors at a Steep Discount

A report by The Atlantic reveals that the Housing and Urban Development Department (HUD), has been selling large numbers of delinquent, FHA-insured mortgages. When a borrower can’t afford to pay her mortgage, the bank that owns the mortgage will make a claim on its FHA insurance. FHA pays the bank and in exchange, it becomes… Read More »FHA Won’t Reduce Your Mortgage, But it Will Sell it to Investors at a Steep Discount

Bad Debt Collectors and Their Prey: NYT Editorial Board

An excellent November 17, 2015 New York Times editorial highlights several widespread abusive collection practices, and calls on states to update collection and garnishment laws to better protect consumers from predatory debt collectors. “For example, companies that buy up consumer debt for pennies on the dollar from creditors and then try to recover the full debt for themselves often pursue people for debts that are too old to be legally collected or fake documents intended to show that the debt is authentic.” For years, consumer advocates have been pointing out these types of abuses. Perhaps the NYT coverage will lead to greater public awareness and thereby subject collectors and the court system to greater scrutiny. The editorial is reprinted in full below:

Read More »Bad Debt Collectors and Their Prey: NYT Editorial Board

Whether Debt Collectors Break The Law By Sending Letters On Debts Discharge In Bankruptcy

After a bankruptcy discharge, some debt collectors and mortgage servicers send collection letters that don’t distinguish between people who owe debts, those who have filed bankruptcy and even those who have received a discharge in bankruptcy. Instead, they send the exact same debt collection letter to everybody, and just add some boilerplate language that (so… Read More »Whether Debt Collectors Break The Law By Sending Letters On Debts Discharge In Bankruptcy

Massive Multi-Agency Campaign Announces Many New Enforcement Actions Against Illegal Debt Collection Practices

On November 4, 2015, the FTC and a coalition of other law enforcement agencies announced a huge enforcement campaign against illegal debt collection practices: The Federal Trade Commission and other law enforcement authorities around the country announced the first coordinated federal-state enforcement initiative targeting deceptive and abusive debt collection practices. This nationwide crackdown encompasses 30… Read More »Massive Multi-Agency Campaign Announces Many New Enforcement Actions Against Illegal Debt Collection Practices