Strange Settlement Offer - Scam?

[yevgeniy]

Greetings,

I would be grateful if someone could assist me with identifying whether or not the attached letter is a scam. I have never received collection letters through the Postal Service with such format before. The amount owed is one that I am not familiar with. When I tried calling the provided number, it would disconnect. Furthermore, I couldn't find any additional information on this agency on Google.

Has anyone dealt with this type of thing before? I suspect it is a scam but I am not sure.

Thank you.

EDIT: I attached a little form which they included with the envelope for the payment.

Edited April 10, 2018 by yevgeniy
Added another attachment.

[BackFromTheDebt]

It could very likely be a scam.  It could be a fake debt or a debt past SOL.  

One possibility -- send a DV letter to them.  If they don't show the origins of the debt, it's not real.  If they don't answer the DV letter, it's almost certainly a scam.  Also, if they don't answer the DV letter, even if it IS real, they can't legally collect in the meantime.  

 

EDIT TO ADD:  On the small possibility that this IS real, there are some FDCPA violations.  Failure to warn about the 30 days, not to mention overshadowing by the 14 day limit and no notice of the 30 days to respond.  I would not worry about it now.  On the off chance this is real, they probably won't sue, and if they do sue, you have counterclaims more than the alleged debt.  

Edited April 10, 2018 by BackFromTheDebt
Add more info

[Goody_Ouchless]

Google is your friend. http://www.lgn-int.com/

Looks like many "businesses" at same address all running different scams.

[small-town-girl]

Looks fake to me. An even amount and going to let you settle for less than 10%?  I would do as Backfromthedebt suggested. Keep us posted!  ?

[BackFromTheDebt]

I did find a company by that name on the internet.  It is a company that factors freight bills.  Did you have a freight bill for this amount, and if so, was this a commercial or consumer debt?

 

My advice in my last post is geared towards consumer debt.  

[yevgeniy]

Thank you very much for your responses. It makes me feel easier in heart.

4 minutes ago, Goody_Ouchless said:

Google is your friend. http://www.lgn-int.com/

Looks like many "businesses" at same address all running different scams.

I found that link before but the logo and the phone number didn't match with what's in the letter. That's why I suspected it was a fake initially. Your perspective does make a lot of sense, however. Thank you!

4 minutes ago, BackFromTheDebt said:

I did find a company by that name on the internet.  It is a company that factors freight bills.  Did you have a freight bill for this amount, and if so, was this a commercial or consumer debt?

 

My advice in my last post is geared towards consumer debt.  

I never dealt with any freight companies and have no outstanding bills of any kind. I am not even sure that this a real collection agency which is why I decided to ask here.

 

[BackFromTheDebt]

All I could find of the company on the internet is a Facebook page.  Can't tell if it is legit or not.  The address is different from the one on your letter, which means nothing.  

A DV letter will either expose this as a scam, or, less likely, reveal a debt you didn't know about.  

Again, my feeling is this is either a scam or SOL.  Nobody would offer $39 settlement on a real $550 debt unless there was something really weird going on.  

[yevgeniy]

3 minutes ago, BackFromTheDebt said:

All I could find of the company on the internet is a Facebook page.  Can't tell if it is legit or not.  The address is different from the one on your letter, which means nothing.  

A DV letter will either expose this as a scam, or, less likely, reveal a debt you didn't know about.  

Again, my feeling is this is either a scam or SOL.  Nobody would offer $39 settlement on a real $550 debt unless there was something really weird going on.  

That makes sense.

I will send a DV letter and see if anything comes from it. Thanks very much!

[Goody_Ouchless]

A DV also lets them know that they found a "live one." This could all be used to verify an ID theft. I'd toss letter and forget about them.

 

[LaneBlane]

Looking at both documents, I have the impression this may be a scam involving IRS Form 1099C.  This makes a person responsible for paying taxes on discharged debt.

If you sign the form they provided, you're agreeing you owe $550.00 and are settling the debt in full for $39.00.  If you look at the letter, it includes a paragraph that says they are obligated to complete IRS Form 1099C on discharged debt.

Anyone who pays $39.00 and turns in this form would likely receive a 1099C for $511.00.  You would need to claim this on your taxes, while the "collection agency" deducts it.

If it were me, I wouldn't respond.

[yevgeniy]

9 hours ago, LaneBlane said:

Looking at both documents, I have the impression this may be a scam involving IRS Form 1099C.  This makes a person responsible for paying taxes on discharged debt.

If you sign the form they provided, you're agreeing you owe $550.00 and are settling the debt in full for $39.00.  If you look at the letter, it includes a paragraph that says they are obligated to complete IRS Form 1099C on discharged debt.

Anyone who pays $39.00 and turns in this form would likely receive a 1099C for $511.00.  You would need to claim this on your taxes, while the "collection agency" deducts it.

You may want to consider sending the original of both documents and the envelope (if you have it) to the IRS, making sure to keep a copy for your records.  If it were me, I wouldn't respond.

Thank you. I'll keep that in mind.

[WhoCares1000]

First off, if you do not recognize the debt, then don't pay it. Odds are, it is either a debt which the SOL has long expired OR is a fake debt. You are not required to pay something just because some company thinks that you might owe it. They are therefore either trying to scam you or trying to reset the SOL.

As others have posted, there are violations of federal law with this letter so you have 2 choices. You can either ignore it or you can send a DV request. Odds are, they will not answer the DV request and if this creditor tries to collect without answering the DV, you have another violation. If a collector does call you, simply mention the violations and ask when they whether they will send you a check right now or will you have to go to federal court to get it. That will get rid of the collector right away.

I would rather ignore the letter. They have already violated the law so you can see if they even try to call. If they don't call, then don't sweat it.

As for the 1099-C thing, realize that it is just simply a fraction of the debt that is paid in taxes, not the full thing. On a $550 debt, if you pay $39, that leave $511 as taxable income. Since you are in Indiana, we will assume you are in the 12% Fed tax bracket and the 3.3% Indiana Tax rate. This means that the taxes on $511 is about $78 (511*.153). Not going to break the bank for most people.

[upcycleliving]

18 hours ago, LaneBlane said:

Looking at both documents, I have the impression this may be a scam involving IRS Form 1099C.  This makes a person responsible for paying taxes on discharged debt.

If you sign the form they provided, you're agreeing you owe $550.00 and are settling the debt in full for $39.00.  If you look at the letter, it includes a paragraph that says they are obligated to complete IRS Form 1099C on discharged debt.

Anyone who pays $39.00 and turns in this form would likely receive a 1099C for $511.00.  You would need to claim this on your taxes, while the "collection agency" deducts it.

If it were me, I wouldn't respond.

Wouldn't the $600 have already been deducted because the account was charged off?

[yevgeniy]

After doing some more research, I think that I will ignore the letter. The phone number does not appear to be real and, as others have posted, there are various businesses operating from the same address listed in the letter. These include investment firms, cargo operators, and even an office supplies store. I don't know how many or if any of them are actually real so I will just play it safe for now. If they are somehow real and do try to collect, I will consider the possible violations against them.

Thank you everyone, once again.

[LaneBlane]

4 hours ago, upcycleliving said:

Wouldn't the $600 have already been deducted because the account was charged off?

In my scenario, I don't believe an account ever existed.  No OC is mentioned in the notice.

 

[WhoCares1000]

10 hours ago, upcycleliving said:

Wouldn't the $600 have already been deducted because the account was charged off?

When the account was charged off, the original creditor would have sold it and then deducted as a loss the difference between the account balance and the amount they got for it.

Say the balance was $600 and the OC got $60 (10 cents on the dollar) for the debt. That means they would deduct $540 from their income.

Now if the JDB can collect the full amount, they would have to report as income $540 (Amount collected minus about paid). If the cannot collect the full amount, they either take a settled amount which is income attributed to them above the amount they paid for the debt and the remainder is income to you. If the cannot collect anything and sell the account down the line, they take a loss for the difference between the amount they get for the debt vs what they paid.

The whole point of the 1099-C is that the IRS (or government) is going to get their pound of flesh from someone, be it the bank, JDB, or debtor.

[upcycleliving]

Somebody posted here that the scam is that they get $39 and then they get a $511 tax deduction when the debt is totally made up. 

If this is a scam and the debt is fake you wouldn’t get a 1099 because the $39 is all profit and the “collection agency” has $0 invested in this debt,

I’m guessing the 1099 reference is there to make this letter appear to be legitimate. By mentioning a government agency it makes them more credible.

[BackFromTheDebt]

All of this is interesting speculation.

However, a scam is a scam, whatever kind of scam it is.  Best to avoid it.  

[WhoCares1000]

The problem is that their claim (whether real or fake) is that you owe $550. By accepting the $39, their claim is that they forgave the other $511 which according to the IRS is considered income (again regardless of whether this is real or fake). The IRS has no clue as to the status of the debt, only that it was reported to them.

[LaneBlane]

Let's say there is no past due account and no balance owed.  If someone receives an official looking letter that says they owe $550 and can settle the debt for $39, how many people would pay without giving it a second thought?

The "collection agency" receives $39 and can write off $511 on their taxes.  If just 12 people paid, that's $468 plus $6,132 in write-offs.

[small-town-girl]

This scenario seems fitting with the April 18th tax day quickly approaching!  ?

[BV80]

45 minutes ago, LaneBlane said:

Let's say there is no past due account and no balance owed.  If someone receives an official looking letter that says they owe $550 and can settle the debt for $39, how many people would pay without giving it a second thought?

The "collection agency" receives $39 and can write off $511 on their taxes.  If just 12 people paid, that's $468 plus $6,132 in write-offs.

The debt buyer could not write off $511, because that's the amount that was written off by the OC.   The JDB could only write off $39.00, the amount it paid (and lost) if that amount was not recouped.

[LaneBlane]

2 hours ago, BV80 said:

The debt buyer could not write off $511, because that's the amount that was written off by the OC.   The JDB could only write off $39.00, the amount it paid (and lost) if that amount was not recouped.

In my scenario, no debt ever existed.  The entire thing is made up in order to get people to pay $39.00 and sign a slip of paper that allows someone issue a 1099C and write off $511.00.

Nothing checks out... the company name, address, phone number.

[BV80]

8 minutes ago, LaneBlane said:

In my scenario, no debt ever existed.  The entire thing is made up in order to get people to pay $39.00 and sign a slip of paper that allows someone issue a 1099C and write off $511.00.

Nothing checks out... the company name, address, phone number.

It doesn't matter.   The only way they could write off $511.00 is if the debt originated with them.  In other words, they'd have to be the OC.    Whether a debt existed or not, they would not be able to show the IRS that they are an original creditor with whom a consumer opened an account.

[texasrocker]

9 hours ago, BV80 said:

It doesn't matter.   The only way they could write off $511.00 is if the debt originated with them.  In other words, they'd have to be the OC.    Whether a debt existed or not, they would not be able to show the IRS that they are an original creditor with whom a consumer opened an account.

Just one more perspective on this- if they are scamming people they could also be scamming the IRS so he may be right.