The proliferation of the debt buying industry has brought all kinds of characters into the debt collection business. It seems as though almost anyone can open a debt collection business.
Recently New York has been in the news because former Attorney General Cuomo, now Governor Cuomo, shut down several collection agencies for engaging in illegal debt collection tactics.
Debt validation can protect you against the bad actors in the debt collection world. Consumers have received all kinds of responses to requests for validation and some have not received any response at all.
Listed below are a few ways a debt collector may respond to validation request:
Legitimate Proof from the original creditor
If the debt collector responds in writing with sufficient proof according to FDCPA statutes, you may want to settle the debt. However, the collection agency cannot send you a computer printout of a “mere itemization”.
That does not constitute sufficient debt validation according to the Federal Trade Commission. Documentation from the original creditor such as original account statements, original signed credit or loan agreement can be viewed as sufficient proof.
Assignment of debt from original creditor
If the debt collector claims they were assigned the debt from the original creditor then you should request proof of the assignment. An assignment of debt is not the same as purchasing a debt.
With an assignment of debt, the debt collector does not own the debt but the the original credit contract contains a clause that “debtor agrees to be responsible for repayment of the debt to the creditor or ITS ASSIGNS.” If that clause exists then you entered into a contract not only with the original creditor but also any debt collector “assigned” to collect the debt.
But remember to request a copy of the contract with your signature, showing the assignment language. A debt collector claiming they have been assigned a debt but cannot provide proof of that assignment has no legal right to claim you owe them for a debt.
This is important because if you are sued by a debt collector the complaint for money may state the debt collector is the assignee of the original creditor when this is simply not true.
Usually when pressured to produce the assignment, the debt collector cannot produce it. And when asked to produce the contract showing the debt was purchased, they do not want to produce that document because it will show that debt; among many others with the same creditor, was purchased for pennies on the dollar.
Debt collectors find it difficult to justify the added fees and costs. When a debt collector files a lawsuit, they are really hoping you do not respond so they can simply get a default judgment without providing any legal proof to support the lawsuit. There have been countless consumers who fight back, respond to lawsuits and win!
If the collection agency responds in writing but does not provide sufficient proof, you may choose to write a 2nd request for validation and reassert that you dispute the alleged debt.
Debt collector posing as the original creditor
Some debt collectors will respond to a validation request with documents stating they are the original creditor. Some will even have another collection agency represent them in an attempt to appear as though they are the original creditor. Just remember, a debt collector is not the original creditor and you never entered into a contract with them.
Debt validation must come from the original creditor which is the company you entered into a credit agreement with when you first incurred the debt. The validation must be mailed by the debt collector. Debt collectors often do not have any documentation from the original creditor.
No response at all
Because many debt collectors enter the junk debt buying industry to make a quick profit, they never send written communication and never respond to debt validation requests. You may discover sending a debt validation request will simply get rid of a debt collector as they do not wish to pursue a debtor that is aware of their rights.