Encore Partners With U.S. Reps. Peters and Hunter On Bill To Exempt Forgiven Debt From Federal Taxation

Encore Capital Group, Inc. (NASDAQ:ECPG) announced yesterday that it has collaborated with U.S. Reps. Scott Peters (CA-52) and Duncan Hunter (CA-50) to create a bill that would exempt up to $2,500 worth of forgiven personal and household debt from federal taxation. The bill (H.R. 2640) was recently introduced as the “Consumer Debt Forgiveness Tax Relief Act of 2015.”

Under the current system, a consumer who is forgiven personal or household debt is still burdened with a tax on the value of that forgiven debt. Although it’s less than what they would have had to pay to satisfy the debt, this leaves many consumers who thought they had negotiated a lesser amount due – or even no amount due – with a bigger obligation than they realized. And now they owe the IRS, not just the collection agency.

“Through our work with millions of consumers, we’ve seen firsthand that the current system creates a frustrating ‘one step forward, two steps back’ situation that penalizes people who are doing the right thing by repaying their debt,” said Sheryl Wright, Encore Capital Group’s Senior Vice President of Corporate & Government Affairs. “This legislation seeks to empower consumers at a critical juncture on their path to financial recovery and stability.”