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Debt validation - your best shot against collection agency

Thu Sep 18, 2008 03:09PM | By Joe

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Debt validation also called debt verification is often your only weapon against all those pesky debt collectors. Under the United States Federal Fair Debt Collection Practices Act or FDCPA, you have a right to challenge a debt and receive written verification of a debt from a collector. The right to dispute and verify the debt is set under section §809. You can see it in either, PDF or HTML format. There are, however, few caveats you'd better be aware of, so read on.

The debt collector has 5 days from its very initial contact with you to send you a debt validation notice, which must inform you of the right to dispute the validity of the debt within 30 days. The FDCPA allows the collector to include such a notice in the initial communication and it is almost always is. However, if you first hear from collection agency by phone, you should receive a debt validation reminder from this agency within 5 days.

You can dispute a debt at any time, but to trigger validation rights covered by the FDCPA, you must sent a written request within 30 days of the first written notice from debt collection agency. Also according to FDCPA, this first written notice must specifically state that if you notify the debt collector in writing within the 30-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 you and mail you a copy of such verification or judgment.

If you do not request debt verification within these 30 days after receipt of the notice, collector has a right to assume that the debt is valid. But your failure to dispute the validity of a debt under the section §809 may not be construed by any court as an admission of liability by the consumer. Sounds confusing, but all it means is that while collector can start harassing you, no court can use your failure to act within 30 days as a proof that the debt is yours. Still start debt validation process as soon as you get collection notice.

Three other very important points are,
- while debt collector must cease all attempts to collect the debt until it sends a sufficient response, there is no deadline for the debt collector to provide a response to the request for validation, so after you send your validation letter, collector stops its collection efforts even for quite a while, do not just think that you are of the hook
- if you send a timely request for debt validation and a debt collector fails to provide proper validation or does not respond at all, but continues collection activity, you may file a law suit in state or federal court for violation of the Fair Debt Collection Practices Act
- under FSCPA rules, any debt dispute must be reported by the collection agency to the three credit reporting bureaus, which is very important if you are about to apply for a loan

So this is rather detailed outline of debt verification procedure and what it involves. Be also aware that like it or not, the FDCPA does not precisely define what constitutes proper debt validation, and there was a legal precedent which established a relatively low standard. Basically, judges will take something along these lines - "Verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt." How do you like that? Consumer advocates have criticized this legal standard for validation as too low, allowing debt collectors to justify providing little information in response to a dispute. But that is all you have.

Two rather obvious things too important not to reiterate are,
- your request for debt validation must be submitted in writing via certified mail with return receipt requested
- you can dispute the entire debt, part of the debt, or request the name of the original creditor

See debt validation letter samples.

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