A debt collector contacts you regarding a debt. How do you know this is your debt and that you actually owe the collection agency?
Make debt collectors and junk debt buyers prove you owe them. What if the debt has already been paid or perhaps the Statute of Limitations has expired on the debt and you cannot be legally sued for the debt?
Debt validation forces a collection agency, debt collector and even a law firm in the business of debt collection prove you owe the debt. It is a powerful weapon against debt collectors which protects consumers from unfair and deceptive debt collection practices.
In some instances, consumers who simply request debt validation discover the junk debt buyer will go away because their goal is to get a quick payment and move on without putting too much effort into collecting the debt.
How Debt Validation Works
According to the Fair Debt Collection Practices Act (FDCPA) you have the right to request a collection agency validate the debt they are trying to collect. Essentially, the collection agency must show that you owe the “original creditor” the debt, not the “collection agency” attempting to collect the debt.
The collection agency is required to send you a debt validation notice within five (5) days of their first communication with you. If the first communication to you is a letter it may already include the notice.
The notice will contain a “mini Miranda” stating: “This is an attempt to collect a debt and if we do not hear from you within 30 days of this notice, we will assume the debt to be valid.”
Writing a Debt Validation Request
When requesting debt validation, you can dispute the entire debt, part of the debt, and you can request the name of the original creditor. Your debt validation letter must be sent in writing. After receiving your dispute, the collection agency must send you proof that it owns or has been assigned the debt by the original creditor. Verification that you owe the debt and the amount of the debt needs to include documentation from original creditor (however, it is the debt collector who sends it to you). It is not enough for the collection agency to simply send you a printout of the amount owed.
If You Request Verification, Collection Must Stop
After receiving your dispute, the debt collector cannot contact you until it has provided you with the requested information. The collection agency must stop its collection efforts and cannot resume them before double-checking the debt information with the original creditor and mailing you the verification, including the original creditor’s name and address.
Debt Collectors can be Deceptive
Many debt collectors will send letters with no stamped postal information that lets you know when the letter was mailed. Debt collectors never send these notices certified mail or even registered mail so you have no way of knowing when the 30-day period begins. You certainly cannot go by the date on their letter because in many cases it is back-dated and by the time the consumer actually receives it, a week or two has gone by according to the date.
Fortunately for the consumer, because the debt collector does not send the letter certified or return receipt, they cannot prove when the 30-day period began. You can still request debt validation after the 30-day period has passed and question the validity of the debt.
But the debt collector does not have to honor your request for debt validation if; after the initial notice has been sent, you failed to request debt validation during that time.
The good news is that if you did not request debt validation within 30 days of the first contact, the courts will not consider you having admitted to owing the debt or that the debt is valid. See FDCPA § 809 (c): “The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.”
Proper Debt Validation Documents
Legally what constitutes proper debt validation is an unsettled issue and depends on the specific nature of the dispute. Debt collectors believe all that is required is verification the person they are attempting to collect from is correct and the amount being claimed is accurate.
However, the FDCPA requires verification of the validity of an alleged debt, not “verification” of your name and amount of an alleged debt. Proper validation should be in the form of documentation from the original creditor, not the debt collector. Debt collectors must provide proof you owe the debt to the original creditor, not to them.
Documentation can be account statements from the original creditor, payment history from the original creditor, a copy of the original signed loan agreement or a credit card application with terms and interest rates. Although rarely done, validation can also include an itemized accounting of the amount claimed to be owed, including all fees and charges and how those fees and charges were determined.
Debt collectors purchase debts for pennies on the dollar
It has become increasingly common for original creditors to sell bad debts. Debt collectors purchase these debts in large portfolios for pennies on the dollar. The debt is often inflated to include unknown fees and interest rates.
Improper Debt Validation Documents
Some unscrupulous collection agencies and junk debt buyers will simply send you a printed form from their computers because they have no original proof from the creditor. Oftentimes, when junk debt buyers purchase charged off debts, they simply receive basic information about the debtor.
The basic information comes on a spreadsheet with many other names, address, and social security numbers (in whole or part) of other consumers. Typically no back up or supporting documentation from the original creditor is obtained because it costs extra for the junk debt buyer. Take a look at What Constitutes Proper Debt Validation to get a better idea of the proof junk debt buyers should provide.
Consumers have received all sorts of improper documentation posing as debt validation. You may get a piece of paper entitled “Validation of Debt” or “Verification of Debt” or even a computer generated form made to look like a billing statement from the original creditor in response to a debt validation request. This is not sufficient for debt validation. The Federal Trade Commission has made it clear that a “mere itemization” is not sufficient proof to validate a debt.
I read in a forum some time ago that a debt collector, Claims Recovery Systems, placed an ad on Craigslist seeking contractors with data conversion skills. Someone in the forum responded to the ad and after they received the work in pdf attachments, they realized the pdf files were old past due credit card statements. The employer wanted contractors to modify old credit card statements and specifically requested:
“The Word docs, in layout, font type, and relative size, must closely [resemble] the original pdf files, and be editable at every stage of the document, with the exception of the logos, and some of the other proprietary looking objects.”
Thankfully the respondent did not follow through and reported the debt collector to the Federal Trade Commission and their state’s attorney general. One can safely assume these modified credit card statements were purposely intended to mislead a debtor, so be very careful when dealing with debt collectors.
Do Not Provide Documentation
Some collection agencies realize they have no original documentation to prove the debt is yours and will resort to asking you to “help them” resolve the matter. After you request debt validation, you may get a letter from the debt collector requesting you send in an old statement from the original creditor or even a cancelled check of a payment you made to the original creditor.
DO NOT FALL FOR THIS TACTIC! Debt validation requires the debt collector provide proof and documentation from the original creditor, not you. Do not help them!
Do Not Acknowledge the Debt
Never acknowledge you owe the debt. Make the collection agency or junk debt buyer prove you owe the debt. Avoid getting on the phone with any collection agency, junk debt buyer or collection agency law firm. Deal with them via U.S. Mail only. Acknowledging you owe the debt, making payment arrangements or even making a partial payment on the debt may re-start the statute of limitations on the debt.
No Telephone Communication
Send a letter requesting communication by U.S. mail only because telephone calls to your employer and home are inconvenient. You will discover many debt collectors will never send written communication, they only want to deal with you over the telephone in an attempt to intimidate you into paying.