Do not ignore a letter or phone call from a debt collector indicating that you owe money, and do not ignore it. Credit scores can be significantly damaged by incorrectly putting a collection account on your credit report. Verification of the debt is an option you have if you want to be sure it is real and that the collection agency is looking for you. Remove a collections account without harming your credit score by starting here.
What is a debt validation letter?
For Canadian debt validation, the letter is an official proof of the debt’s validity, as well as a statement of how much you owe and when it can be collected. Additionally, you can request that all correspondence from the agency be in writing, and that any collection calls cease.
How do I write a debt validation letter?
Send the following request for validation to a collection agency if you receive a phone call or letter regarding a debt and want further information. This letter should be sent by registered mail so that you have documentation that you sent it to the collection agency.
An example of a letter for a debt validation request can be seen here. As a demonstration, this is all that is required. Before submitting a debt validation request to a collection agency, seek legal advice from an attorney.
Do debt validation letters really work?
A Debt Validation Letter should be sent to a debt collector nearly every time they contact you about a debt. To make the collector respect you and get serious about the problem, you must write a letter first.
Of the complaints made by consumers against debt collectors, 49 percent stated the collection agency tried to collect an unpaid bill. There are 53% of debt collectors that contact their clients to inquire about a debt that is not theirs or one that is incorrectly stated, according to the National Debt Collection Practices Association (NDCPA).
It seems that debt collectors are going after many people for money that they don’t owe. Your protector is the Debt Validation Letter.
Debt collectors will assume that the debt is valid if you do not contest it, according to the FDCPA. That’s a bad sign. You are forfeiting your legal rights if you do not file a Debt Validation Letter.
When dealing with a debt collector, a Debt Validation Letter can be extremely helpful.
- Due to lack of proof, collectors are more likely to back down if you deny owing the amount.
- It’s likely that the debt collector will have to prove that you genuinely owe the whole amount if the debt is just partially yours. Thousands of dollars of fake debt can be eliminated by this method.
- However, even if you fully owe the bill, the debt collector may not be able to present adequate proof that you owe it or that they own the debt and are therefore legally permitted to pursue collection efforts against you.
- It doesn’t matter whether or whether the debt collector is able to verify the debt, you will still benefit from obtaining further information on the issue. You will be in a better position to negotiate a settlement if you write a letter. To make matters even worse, you might ask the collector to stop contacting you.
You can comprehend why a Debt Validation Letter matters if you understand the debt collecting process. Debt collectors are paid between 1% and 10% of the debt’s worth by banks and lenders to collect overdue debts. Afterward, debt collectors try to recover the debts from customers. If everything else fails, they may resort to legal action in order to recoup their losses. There are several instances where debt collectors are paid by banks without proper documentation. Due to this lack of verification, the debt collector may be unable to determine who owes them money. A Debt Validation Letter will make it more difficult and expensive for them to recover the debt if you send one. To be profitable, they must keep their costs down. With this letter, they have increased their expenses, increasing their likelihood of bankruptcy.
It may be a wise strategy to keep quiet and not issue a Debt Validation Letter in some situations. However, it is possible that the statute of limitations is about to run out. Nevertheless, we have our doubts about this plan.
Additionally, the Debt Validation Letter might put an end to the harassing phone calls. Two methods are available to it. Letters disputing debts are exempt from the FDCPA’s Section 809(b) “There must be an end to all “collection actions and communications”. As stated in FDCPA Section 805, the consumer may request the collector to cease and desist from harassing or harassing them “suddenly stop communicating” If you’re being sued by a debt collector, they’ll only be able to contact you to notify you that. By using a debt validation letter in this manner, you can force the collector to suit you or go away. SoloSuit’s lawsuit response document can help you win your case if they sue you.
What is the purpose of a debt validation letter?
Legally, debt collectors must issue you a debt validation letter, which details the debt, the amount owed, and other relevant information. Send the debt collector a debt verification letter if you’re still unsure about the debt you’re being requested to pay.
What happens after debt validation letter?
Get your hands on this: Around 82,700 consumer complaints regarding debt collectors were filed with the Federal Trade Commission (FTC) in 2020. Nearly half of those complaints were concerning debt collection attempts for which the complainant was not responsible. 1 That is absolutely unacceptable.
There’s a good chance that your “debt” is bogus. Debt that has been sold and resold numerous times may also be an option. Collection firms buy unpaid debts from creditors and then send their dogs to hunt you down. However, these agencies aren’t the best at keeping track of things. Errors and mistakes are common.
Without a debt validation letter, you may find yourself in one of the following situations:
- After the statute of limitations has expired, reviving debt (or the amount of time a creditor can legally come after you for a debt)
All kinds of communication with you must be halted until a debt validation letter is received from the debt collector. You won’t have to deal with phone calls, mailings, or the credit bureaus as a result of this.
What a Debt Validation Letter Reports
There are a number of items that should be included in your debt validation letter.
- a 30-day grace period for disputing the debt amount (after that, the debt will be assumed valid)
- Proof that your debt will be validated by mail if you file a dispute within 30 days of the due date.
- Including a 30-day deadline for debt collectors or agencies to give further information about the original creditor if you ask for it.
What if the Collection Agency Fails to Validate the Debt?
A debt collector is required to reply to a request for a debt validation letter under the Fair Debt Collection Practices Act (FDCPA). They are in breach of the law if they do not. Report them to the FTC, the Consumer Financial Protection Bureau or your state’s attorney general (CFPB). There’s also a $1,000 cap on your damages in a lawsuit. 2
These money tyrants will keep you on your toes. Keep a record of all correspondence with debt collectors, including phone calls, and make sure you have a copy of every document. In the event that you need to file a complaint with the attorney general, keeping a complete record like this will be helpful.
What to Do After Receiving a Debt Validation Letter
Read your debt validation letter carefully to ensure there are no grammatical mistakes. It’s your responsibility if the debt is yours to pay. It’s time to get down to business in Baby Step 2.
Pay off your debt with the same ruthlessness and tenacity that the debt collectors have shown in pursuing you. Whether it’s starting a side business, working more hours, or selling everything in your basement that’s gathering dust, now is the moment to throw all you have at your debt.
When you receive your debt validation letter, you may notice anything amiss. Sending a debt verification letter is your next step. Even though they sound alike, these two letters are really distinct.
How does debt validation work?
Debt validation is every person’s right to demand the debt collector to verify that a debt is owed. Requesting debt validation requires that a written request is sent to the debt collector before the end of 30 days after being contacted by the collection agency.
Should you send a debt validation letter?
Notice that this letter is shorter and more concise than other sample debt validation letters that you may find online. That’s on purpose. A little goes a long way.
Using a lot of bullet points in a lengthy letter can actually signal to the recipient that you believe you owe some or all of the money. “I don’t know what this is.” That’s all the letter above says. If you can’t back up your claim, close the file and walk away. “
- With a time stamp, the debt collector will never be able to claim that the letter was not delivered “Your debt validation request has been lost in the shuffle.
- As a result, you’ll be able to grab their attention because only a few people are doing “Certifiable mail is used for “important” documents.
There is no confirmation of delivery when you send your debt validation letter via email, fax, or conventional first-class mail.
Debt Validation Letter FAQs
When a debt collector requests proof of a debt, what kind of paperwork is required?
In order to prove that you are responsible for the debt, look for a contract or promissory note with your signature on it. Make sure that the debt collector’s claim is backed up with statements that are clear and unequivocal. It is imperative that the paperwork is legitimate. Make sure you don’t fall prey to the scam of printing nonsense and then claiming that it “validates” your debt when it does nothing of the kind.
Debt collectors are not required to respond to your debt validation request within a certain time frame. The FDCPA effectively states that unless the debt collector proves their claim against you, no further collection effort should take place.
Debt collectors are required by the FDCPA to halt all collection efforts until they give you with the documentation you need to support your claim against them.
Determine if your state has a statute of limitations for your case. Each state has its own statute of limitations on how long you can be held liable for unpaid debts. These statute of limitations guidelines are excellent.
Should you file a lawsuit against the initial debtor? Let’s look at a collection agency! A debt buyer might be an option.
In cases when you believe the debt claim against you is incorrect, you should file a debt dispute. The debt validation process should not be employed if the debt is legitimate and a voluntary and amicable resolution is your goal. When it comes to ancient debts, it’s important to keep in mind that they may have been sold a number of different times, resulting in careless record-keeping. However, in this scenario, it may be a good idea to ask for proof of the debt because there is a significant probability that they have lost or are too busy digging through their archives to find the paperwork to back up their claim against you.
Everything is fine. It’s possible the debt collector simply closed your file because they didn’t have the documents to support their claim after you sent them your letter of debt validation. So, the mission was a success.
Conclusion
Debt validation is a valuable tactic for defending against debt collectors. For the best results, however, it must be used as mentioned above.
When it comes to debt collection, debt collectors realize that most consumers have no idea what their legal options are. In actuality, you do have rights.
Debt collectors must provide you with proof of their claim if you dispute the legitimacy, in whole or in part, of the debt they claim you owe them.
Their collection efforts against you will be put on hold and their file will be closed if there isn’t any proof that you owe them money.
What happens if a debt collector Cannot validate a debt?
An individual may challenge the legitimacy of an outstanding debt if they believe it is not theirs. If you receive a debt validation letter, you have 30 days from the date of the letter to take action. Otherwise, the creditor is free to presume the debt is valid and begin collection efforts. Among the options you have are:
If you’re unsure about the debt, you can utilize the second option. If you believe the debt is yours, but prefer to work out a payment or settlement with the original creditor, this may be an option for you.
How to Prove a Debt Is Not Yours With a Verification Letter
Debt verification letters are used when disputing a debt. Requests for further information from the collector are basically a request for the collector to produce extra proof that the debt is yours. Request that the collection agency or creditor supply you with the following:
- In order to prove that you owed the obligation at some point, such as by signing a contract.
- It’s important to know how much you owe and how long it’s been since you’ve taken action on the debt.
To help you get started, the Consumer Financial Protection Bureau has provided a set of sample letters. Credit repair companies can also help you by sending and managing dispute letters on your behalf.
Notify the Credit Bureaus
It is illegal for a debt collector to try to collect money from you if they can’t present you with proof of a debt. In addition, the collection agency must petition the credit bureaus to erase any unfavorable reports relating to it. The credit bureaus can be notified and asked to investigate the problem if the company does not remove the negative item.
What is the difference between debt validation and debt verification?
In contrast to a debt validation letter, a verification letter must give proof of the debt the collection agency claims to have.
It’s possible that the collection agency’s hands may be tied if they don’t have enough evidence to support their claim that you owe. It’s a good idea to obtain as much information about the debt as possible, even if you intend to pay, in order to guarantee that you are paying the correct amount and to the correct collection agency.
A debt verification letter request should be as detailed as feasible. The following is a list of things you should include in your application:
- Request to know why the debt collecting firm thinks you owe the money back. To prove that the loan is yours, you can ask who the original creditor is and get a copy of the original loan contract.
- Make sure you get a copy of the last billing statement from the original creditor, the date of your last payment, and how long ago it was purchased by the collection agency. In order to ascertain if the statute of limitations for collection has expired, you can utilize the following information:
- Confirm with the collection agency if it has a valid license to collect the debt in your state by asking for proof of this.
A sample letter from the Consumer Financial Protection Bureau (CFPB) is available to assist you if you need additional guidance.
Also, keep in mind that you must deliver the letter within 30 days of getting the debt validation notification. As a result of your actions, the collection agency must halt all further collection efforts until they have given proof of debt verification. Despite the fact that they’ll still need to submit the information, the debt will be valid if you wait until beyond the 30-day deadline.
Send your letter certified mail with a return receipt to prevent it from being misplaced in the mail or being “lost” by the collection agency. The delivery of a letter via certified mail is accompanied by a delivery receipt and a signature. Proof that the mail was delivered is provided by a return receipt.
What is required in a debt validation letter?
- Debt collectors must send you a debt validation letter within five days of first contacting you if they haven’t already done so orally.
- Include the name of your creditor, what you owe, and how to contest the amount in your debt validation letter.
- You have 30 days after getting a debt validation notice to challenge the debt and obtain formal proof from the debt collector.
What is considered debt validation?
If the following information is not included in the initial communication with a consumer in connection with the collection of any debt, a debt collector must give the customer a written notice providing the following information:
unless the consumer contests the legitimacy of the debt, or any portion thereof, within thirty days after receipt of the notice, the debt collector assumes that the debt is valid;
an assurance that if the debt collector receives a written notification from the consumer that they are disputing any portion of the debt, a copy of the verification or judgment will be sent to the consumer within thirty days; and the debt collector will mail a copy of the verification or judgment to the consumer.
If the initial creditor is not the current creditor, the debt collector must supply the name and address of the original creditor within thirty days of the consumer’s written request.
Section (b) of this subsection applies to consumers who notify debt collectors in writing within the 30-day period specified in subsection (a) that they are disputing the debt and/or requesting a copy of a judgment, and a c. The debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt, the name and address of an original creditor, or a copy of the judgment. (A) This title does not prohibit collection actions or communications within the 30-day period mentioned in subsection (a) unless the consumer notifies the debt collector in writing that the debt is being contested or that the consumer requests the original creditor’s name and address in writing. You cannot overshadow or contradict the disclosure of a consumer’s right to dispute a debt or to request information about their original creditor during this 30-day period of time.
As long as a consumer does not challenge a debt under this clause, it cannot be interpreted as an acceptance of culpability on the part of the customer.
A communication in the form of a civil action’s formal pleading must not be considered an initial communication for the purposes of paragraph (d) (a).
If a form or notice is required by the Internal Revenue Code of 1986, the Gramm-Leach-Bliley Act, or any Federal or State law relating to notice of data security breach or privacy, or any regulation prescribed under such a law, it shall not be considered an initial communication in connection with debt collection for the purposes of this section..
It is defined in the above FDCPA Section as the debt collector verifying with the original creditor whether or not the debt amount being sought is correct. Debt collectors are extremely unlikely to contact the original creditor for debt validation purposes at any point during the collection process.
If a consumer receives an original creditor statement or any other information from a debt collector as a form of debt validation, it is likely that the junk debt buyer already had the information. Junk debt purchasers are not in the practice of getting paperwork directly from the original creditor upon a consumer’s request for debt validation.
Be Prepared to Seek Legal Action
You must be prepared to take legal action in order to protect your rights under the FDCPA. When it comes to lawsuits, the majority of junk debt buyers are not interested in spending money on them. A rapid solution is what they are searching for right now.
Junk debt collectors rarely, if ever, get the correct assignment of the debt from the original creditor in order to collect the obligation in legal procedures. For a fraction of what the original creditor paid, most debt collectors are able to acquire debts that the original creditor did not assign or transfer. They bought the debt, not assigned it to them.
If the debt is still within the statute of limitations and recoverable by law, consumers must also be prepared for a lawsuit to be initiated against them. Debt collectors that sue consumers have a good chance of prevailing if they respond to the lawsuit and do not allow a default judgment to take place. To recap, trash debt buyers find it difficult to prove they were assigned the debts in question.
What happens if a debt collector does not validate debt in 30 days?
Within 30 days of receiving the letter, the collector has the right to assume that the debt is legitimate. In this case, they have the legal authority to begin collection procedures and, if necessary, take the matter to court.” Debt collectors have a 30-day window in which you can notify them that you are disputing any or all of the debt.
How long does debt validation take?
You may have to wait a long time for a debt collecting firm to react to your request to validate an existing debt.
I’d estimate the typical response time is between one to thirty days, if they react at all.
FDCPA allows collectors to keep a customer in a state of uncertainty until the statute of limitations runs out.
A debt collector must submit a written notification to a consumer within five days of the first communication with the consumer in connection with the collection of any debt, unless the following information is contained in the original communication or the consumer has settled the amount.
Consumers who dispute their debt or request information about their original creditor must notify the debt collector in writing within the thirty-day period described in subsection (a) of this section. The debt collector must then cease collection efforts until it receives proof of their claim to the debt, a copy of a judgment, or information about their original creditor’s name and address. Only if the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is challenged or that the consumer seeks the identity and address of the original creditor, can the collection activities and communications continue during subsection (a) of this subchapter. The consumer’s ability to dispute the debt or request the name and address of the original creditor must not be overshadowed or conflicting with any collection actions or communications within the 30-day period.
It is not acceptable for a consumer to avoid disputing a debt’s legitimacy under this clause in order to avoid being held liable by any court.
For the purposes of paragraph (a), a communication in the form of a formal pleading in a civil action is not an initial communication (a).
When the FDCPA mandates that a consumer must request validation of a debt or challenge the bill within 30 days, you’ll notice that the collector is allowed to take as long as they like to validate the account.
What will happen if they don’t meet their obligation to show proof of the debt within five days? Nothing? You may be able to sue them for $1000 under 813(a)(2)(a), but I’m not sure what the case law is.
As a result, the FDCPA allows the collector to take as long as they like to reply to your request for validation under this clause, which unfortunately favors the collector.
The FDCPA, on the other hand, specifies different deadlines, as depicted in the graphic below. The FDCPA 809 establishes two key deadlines for the collection of debts. To begin, the debt collector must provide you with five pieces of information within five days of making contact with you for the first time.
A Debt Validation Letter must be sent within 30 days of obtaining this information, challenging the debt and asking proof of its validity, among other things. Without this letter, the debt collector will presume that the debt is real, and you’ll lose a significant opportunity.
How long does a company have to validate debt?
Debt verification letters do not required to be answered by every creditor. If a debt collector tries to contact you about a debt, you have 30 days to request that the debt be validated under the Federal Debt Collection Practices Act. The creditor is legally bound to respond to you if you send a verification request within that time frame. In the event you write a letter to the creditor outside of that time or based on something you find on your credit report, the creditor is not legally compelled to react to you.
A lot of individuals will encourage you to pay the bill in full and ask the creditor to remove the debt from your credit record in exchange. This can be a costly exercise that yields no results in some situations, especially if you don’t believe you owe the money in question. Because many collection agencies have arrangements with the credit bureaus that forbid payment for deletion, most creditors are unable to support this alternative.
