Make Debt Collectors Prove You Owe

Debt validation (DV) is a process where a consumer challenges a third party debt collector (i.e., collection agency or attorney) to provide written verification (also called "validation") of a debt. Your opportunity to use DV is limited to the first 30 days after receiving the initial written notice of your right to request validation of the debt being collected.

As described in the excerpt from the Fair Debt Collection Practices Act (FDCPA) below, this "request for validation" effectively stops the collection process until the debt is validated.

 

FDCPA Section § 809. Validation of debts [15 USC 1692g] (b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector...

 

If a collection agency or attorney (CA) continues any collection efforts prior to validating the debt, they are in violation of the FDCPA. And, if they violate the FDCPA in this way, you can sue them for statutory damages. The court must award you an automatic win of $1000. To see how to do this read the section "Prove a Debt Collector is in Violation and Win $1000".

CAs often practice unscrupulous and aggressive tactics. For this reason, DV has become a popular solution to reduce and even eliminate debts. In fact, it has been successful in stopping collection activities about 80% of the time. The only time DV will not work is if an assigned debt collector gives the debt back to the original creditor (in which case, you cannot use DV) or if the CA validates the debt with adequate proof.

DV is distinct from other debt-reduction strategies such as debt settlement and Chapter 13 bankruptcy because DV allows the consumer to establish an affirmative stance against particular debts right from the beginning. This is important for two reasons: a) it strengthens a consumer's position when negotiating and settling a debt in the future; and, b) in the event the consumer is sued by the CA, it gives them an affirmative defense to possibly have the case dismissed. We'll discuss this more in "The Debt Validation Process."

The Basis of Debt Validation - Why the Law Exists

Have you ever wondered why a collection agency is legally allowed to collect your debt on behalf of the original creditor? Think of it in these terms: Even if you knew you owed Frank (original creditor) some money, and Tony (collection agency) came up to you and asked for Frank's money - would you just hand over the cash? No. No one would. Think of this: how do you know that Tony is actually collecting for Frank? What legal documents does Tony have to prove that he is legally authorized to collect? And, are the fees and interest amounts accurate? How would Tony know?

Every time a debt turns into a collection it hurts your credit. Collection agencies (CAs) like Tony don't just handle a few debts; they deal with portfolios or bunches of accounts, which leads to lots of mistakes. And don't think for one second that all the Tonies out their care about the consumer's best interest. CAs are notorious for collecting debts that have already been paid, debts that may not even be yours, and debts that are past the statute of limitations. Their focus is simply on collecting money from you. After all, that's what they are getting paid for.

The Beginning of a Debt Collector's Collection Activity

If you fall delinquent on an account, it's likely that your debt will either be assigned or sold to a CA. The newly assigned CA will make the initial contact (either by phone or mail) to let you know that they are collecting your debt.

The FDCPA requires that within five days of a CA initially notifying you that they are collecting your debt, they must send you an written notice containing these five things:

 

FDCPA Section 809. Validation of debts [15 USC 1692g] (a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing— the amount of the debt; the name of the creditor to whom the debt is owed; a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

 

If the CA does not send you this letter or include all of the 5 statements, they are in violation of FDCPA. The wording of this letter is very important so as to not confuse or mislead consumers, so save the written notice you receive. You may be able to use it against them in small claims court. See more about this under the topic of 'Ineffective Validation Notice From a Debt Collector' in "Prove a Debt Collector is in Violation and Win $1000".

You Have 30 Days to Request a Validation of Debt

As described above in the FDCPA, a DV letter sent to the debt collector within the 30-day time period shall be enforced by the law. Any DV letters sent after the first 30 days carry no such power or backing. The 30-day "validation request period" starts when the consumer has received a written collection notice from the CA meeting the requirements as described above.

Know Who You're Dealing With

Before you begin debt validation, first determine who is attempting to collect this debt. If your debt is still being collected by the original creditor, you won't be able to take advantage of DV because they are not bound by the FDCPA. Unfortunately, sometimes even the original creditor makes errors and tries to collect a debt that is paid or doesn't belong to you.

Most of the time, however, your debt is sold or assigned to a 3rd party debt collector, usually a collection agency. Some original creditors assign your debt to their own collection company or a law firm, and sometimes your debt is sold off to a completely separate company known as a "junk debt buyer". A junk debt buyer is a CA who has purchased a large portfolio of delinquent or charged-off accounts from credit card companies or other collection agencies. Also referred to in the industry as "bad debt buyers", these companies fall under the Fair Debt Collection Practices Act definition of collection agency. Junk debt buyers generally buy bad debts for pennies on the dollar and then attempt to collect the debt. Regardless of whether the CA is a collection agency, law firm, or a junk debt buyer, DV is successful because it uses the FDCPA and makes the debt collector comply with federal law to validate a debt.

An Overview of the Debt Validation Process

The debt validation process starts by understanding your rights regarding the initial communication from a CA and the 30-day validation request period. Once you know your time frame, the next step is to send a DV letter to the CA and send a dispute letter to the credit reporting agencies.

When you send the DV letter, the CA has to provide adequate proof if they want to continue to collect on the debt. The debt validation process has been well established by many court cases that explicitly define what a CA is required to do and not required to do, after they receive your DV letter. By establishing your position with sending a DV letter to the debt collector and a dispute letter to the credit reporting agencies, the CA will most likely sell the debt to another CA, where you repeat the DV process. Read more important details in "The Debt Validation Process."

Prove a Debt Collector is in Violation and Win $1000

Know that until a CA validates your debt with adequate proof, they cannot collect the debt, contact you about the debt, or report your debt with the credit reporting agencies. If the CA has reported your debt to the credit bureaus before you sent them a DV letter, the CA is not allowed to verify or re-report the debt with the credit bureaus. If a CA has done any of the following, they are in violation of the Fair Debt Collection Practices Act (FDCPA). Learn how to "Prove a Debt Collector is in Violation and Win $1000."

Basic Do's & Don'ts of Debt Validation

In this section you will learn everything you should and shouldn't do when using debt validation. It's important to always keep an organized file with records of every letter and every conversation. Always send a certified mail return receipt with every piece of mail and keep every green card that comes back from the Post Office. Don't be intimidated by debt collectors, and don't procrastinate in taking action. Learn more about "Do's & Don'ts of Debt Validation."

Pro's & Con's of Debt Validation

Debt validation has many advantages. DV let's you properly challenge a debt you either know belongs to you or is completely in error. Using DV against a CA right away helps protect you against future lawsuits and puts you a step ahead of any present or future debt collectors down the road. Learn more about "The Pro's & Con's of Debt Validation."

Sample Letters

Here you'll find: 1) the initial DV letter (including instructions, a cover letter, and the Affidavit of Mailing), 2) the follow-up DV letter, and 3) the credit bureau dispute letter. These are MS Word files which you can download and edit to use for your own purposes.

Disclaimer: The information provided in this site is not legal advice. All information is general information, some of which pertains to legal issues involved in the subject matter. Credit Matters Inc. is not a law firm and is not a substitute for an attorney or law firm. Your access to and use of this site is subject to additional terms and conditions.

All Rights Reserved.