Once your letter is received, the collection agency must stop all collection activity, including reporting and verifying, until they supply proper validation of the debt.
Although no time limit is specified for them to validate, they cannot continue collection activities until they provide such information. Sometimes, collection agencies will stop collection activities and return the account to the original creditor rather than validate the debt, which is perfectly legal.
Either way, not being able to communicate with you provides plenty of incentive for the collection agency to resolve the validation issue. Oftentimes, a debt collection agency may not have the appropriate records it needs to legally collect the debt from you.
Or perhaps you already settled the collection with the original creditor but the collection agency is harassing you anyway. Why is debt validation important? Say that Sarah borrowed some money from John. How can Sarah be sure that she really owes Laura a thousand dollars, rather than John? Furthermore, how can Sarah be sure that if she pays Laura, her debt to John will be satisfied?
Requesting the debt validation helps confirm all these things. You can also check to make sure that all past payments have been applied, as well check the accuracy of any fees applied to the debt. Finally, you get to make sure that the debt is actually yours and that you still owe an outstanding balance. What are your legal rights for debt validation? For these reasons, the FDCPA entitles you as a consumer to validate a debt when a collection agency demands money from you.
When you get your debt validated, you request the collection agency to prove it has the legal right to collect the money. It also confirms that you agreed to pay the debt, and the amount of the debt is accurate. Any debt collection agency that refuses to follow these steps can be reported to both state and federal officials for violating the law. Check out our sample validation letters.
You should also keep a copy of the letter on file. This can help bolster your case in the event you need to sue the debt collector. Once this letter is received, the collection agency must stop attempting to collect the debt until they supply validation. Step 2 If you hear nothing from the collection agency, then you should send them a copy of the receipt, the letter requesting validation, and another letter stating that in accordance the Fair Debt Collection Practices Act, you will not pay the debt.
The credit agency is required under FDCPA guidelines to stop contacting you and may not attempt to sue you for the outstanding balance. Step 3 If the collection agency failed to validate the debt and has sent a notice of the debt to a consumer reporting agency, the notice of the debt must be removed.
If not, send a notice of the failure of the validation to each consumer reporting agency that lists the debt. Unless the credit reporting agency can validate the debt, it should be removed from your credit report. Step 4 If the collection agency sends you proof they have the right to collect the debt, the debt is yours, and the amount is accurate, then the debt is validated.
They can continue their collection attempts. If it is, the collection agency may not sue you for the debt, and you can send an expired SOL notification letter to get them to stop their collection attempts. If the debt has not expired, you must take other steps if you wish to dispute it. Step 5 There are a few different ways to handle verified debt. You can also try to negotiate a settlement, where you agree to pay only a portion of the debt. If the collection is listed on your credit report, you can also request a pay for delete, which gets the item removed from your report once you pay off what you owe.
Do your best to come up with a solution so you can get your finances under control. What should you include in your debt validation letter? First, never admit that the debt is yours or that you intend to pay it because this can reset the statute of limitations. Other Tips for Debt Validation When dealing with collection agencies it is good to remember most states require credit agencies be licensed.
You should check whether or not your state requires a license and, if so, whether or not the collection agency is licensed. Consumers should also note the requirement to validate debts only applies when the debt has been assigned.
If the company demanding payment is the same one who provided you with a service or loaned you money the original creditor they are not required to validate the debt. They may choose to supply validation if you request it, but they are not required to do so. However, there are still other ways of disputing the debt in these situations. You also have the right under the Fair Credit Reporting Act to dispute directly with an original creditor any information reported which you feel is incorrect.
Once they have received your dispute, they must investigate the reported info and they must also report the account as disputed with the credit reporting agencies.
For more information on removing collections from your credit report check out our guide: They may NOT place a new listing or verify a current listing with the credit reporting agency until they have provided you with validation. Looking for the best debt settlement companies? Settle your debt with one low monthly payment.