Impacts on Credit Scores and Approvals

Pro's

Establishing an Affirmative Defense

By sending a debt validation (DV) letter right away, you are establishing a proactive stance against the present collection agency (CA) and any future CAs who may try to collect the debt. If you don't take advantage of DV, the CA will have greater latitude to collect your debt and sue you for a judgment.

Low Risk, High Reward

According to the Fair Debt Collection Practices, Act (FDCPA), every consumer has the right to dispute a collection with a debt collector. By sending a DV letter, the CA is required by law to investigate and send you adequate verification that proves they have the right to collect the debt. A CA cannot continue to collect the debt, or contact you about the debt until they have sent you sufficient proof. Most CA's have a very difficult time providing adequate validation.

After receiving a DV letter, a CA will sometimes sue the consumer for judgment, without first sending a validation of debt. This is a clear violation of the FDCPA because they are trying to collect a debt without validating it, and you can use this to get the suit dismissed and then file suit against the CA and win $1000. Most times, a CA will never send proof and sell the debt to a different CA. You should repeat the DV process with the new CA because they will most likely not be able to provide adequate verification either. In the end, you will probably never have to pay the debt unless the debt is given back to the original creditor.

Do it Yourself, For Free

Debt validation is definitely simple enough for any consumer to accomplish by themselves, without the help of a company who may charge a fee. By using our credit library and educating yourself about DV, you should have the proper knowledge needed to confidently dispute your debt by sending a DV letter. If you wind up in court either defending yourself or by filing suit against a CA, you may want to have an attorney. But, you will have saved a lot of money and know if your attorney is doing a good job.

Con's

The Debt is Given Back to the Original Creditor

An original creditor either sells debt to a debt collector (CA) or assigns the debt to a CA. If the debt is assigned to a CA, and the CA cannot send you adequate validation per your DV request, the CA will most likely give the debt back to the original creditor. Once the debt is given back to the original creditor, they will either assign or sell it to a new CA or attempt to collect the debt themselves. You cannot use DV with the original creditor and if this happens you may be able to settle with them.

The Collection Agency Actually Verifies the Debt

In the case when a CA is able to verify the debt with adequate proof, they could send you a summons for judgment. If you have the financial means, you should settle with the debt collector. If you do not have the financial means you may want to consider filing for a Chapter 7 or Chapter 13 bankruptcy.

In Summary

As you may surmise, DV is more effective with older debts that have been sold or reassigned a couple of times. A new collection has a higher probability of being validated, it just depends on the amount of effort a CA wants to put into it. Since few people are aware of their rights, and CAs tend to hire people that also are unaware of you rights, violations abound and DV isn't take seriously by many CAs. So even if the debt is a new collection, you still stand a good chance of the CA not bothering to validate and actually violating the law or just setting your account aside to work on other easier accounts to collect.

Whether the collection you dispute is new or old, you really have nothing to lose by using DV. In fact, DV may be the single most effective means of thwarting a future lawsuit. For certain, it is the most effective way of stopping harassment and collection abuse.

It's unfortunate that most people have no clue about the powerful tool that DV is. If you're reading this, then consider yourself one of the few that have a bit of knowledge that will make a big difference in protecting your rights.

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.

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