Under the FDCPA, you have the right to “debt validation“. This means a consumer can demand that a creditor reporting information to the credit bureaus prove the account is really your responsibility and that the balances are accurate.
Also, a debt collector must also prove they have a legal right to collect the debt.
Requesting debt validation comes with a variety of benefits and can hopefully lead to getting the collection completely dismissed.
Read on to learn everything you need to know about the debt validation so you can get started today.
What is debt validation?
Once your debt validation letter is received, the debt collector 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 collecting until they provide such information. Sometimes, collection agencies will stop collection activities and return the account to the original creditor rather than validate it, which is perfectly legal. Either way, not being able to communicate with you provides plenty of incentive for the debt collector to resolve the debt validation notice.
Proof That You Owe the Debt
Often, a debt collector may not have the appropriate records it needs to collect the debt from you legally. Or perhaps you already settled the collection, but the collection agency is harassing you anyway. Or maybe they’ve accused you of owing on a debt you don’t actually owe. It’s also possible that the amount owed is incorrect.
Validating a debt can address all of these reasons so that you aren’t subject to incorrect collections.
Why is debt validation important?
Understanding the role of a debt collector may seem complicated, but it’s really not. Let’s break it down into a real-life example to fully grasp the importance of debt collection.
Say that Sarah borrowed some money from John. Later, she gets a call from Laura demanding a thousand dollars in payment of Sarah’s debt to 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?
Reasons to Ask for Debt Validation
A request for debt validation helps confirm all these things. First, you’ll know that the debt collector is legally authorized by the original creditor to collect money from you.
You can also check to make sure that all past payments have been applied, as well as check the accuracy of any fees applied to the debt.
Finally, you get to make sure that you actually owe the debt that they say you do.
If you fail to validate all of these points, you run the risk of paying a debt that you don’t actually owe, or even paying someone who shouldn’t be taking your money. It’s a safe way for any consumer to protect themselves from countless scammers and unscrupulous collection agencies.
Your Legal Rights
For these reasons, the FDCPA entitles you as a consumer to validate a debt when a debt collector demands money from you.
If they can’t validate the debt, the credit bureau cannot list it as a negative mark on your credit report. With debt validation, you’re requesting that the debt collector proves they have the legal right to collect the money.
It also confirms that you agreed to pay the debt, and the amount owed is accurate. Any debt collector that refuses to follow these steps can be reported to both state and federal officials for violating the law.
5 Steps to Validating Your Debt
Within 30 days of learning about the debt, send a debt validation letter via certified mail to the collection agency. Sending it certified is very important as it gives you have proof of your request. You should also keep a copy of the letter on file.
Check out our sample debt validation letters. Sending the demands via Certified Mail Return Receipt Requested gives you proof, in the form of a receipt (“green card”) that your demand was received and on what date it was received.
This can help bolster your case in the event you need to sue the debt collector. While that’s a worst-case scenario, it’s definitely better to be safe than sorry. Once this debt validation notice is received, the debt collector must cease attempting to collect on the debt until they supply debt validation.
If you hear nothing from them, then you should send them a copy of the receipt, the debt validation letter, and another letter stating that in accordance with the Fair Debt Collection Practices Act (FDCPA), 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.
If the debt collector has failed to verify the debt and has sent a notice of the debt to a consumer reporting agency, the notice must be removed.
If not, send a notice of the failure of debt validation to each consumer reporting agency that lists the debt. Unless the credit reporting agency can verify the debt, it should be removed from your credit report.
If the debt collector sends you proof they have the right to collect on the debt, the debt is yours, and the amount is accurate, then the debt is validated. They can continue their attempts to collect.
Check the statute of limitations in your state to make sure that the debt hasn’t expired. If it has, the debt collector 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.
There are a few different ways to handle verified debt. You can pay it in full if that’s a realistic possibility for you. 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.
Whatever you do, don’t ignore the problem. Do your best to come up with a solution so you can get your finances under control. Simply ignoring the issue won’t make it go away.
What should you include in your debt validation letter?
A debt validation letter doesn’t have to be fancy or complicated, but it should include a few essentials. First, never admit that the debt is yours or that you intend to pay it because this can reset the statute of limitations.
Simply let them know that you are requesting validation of the debt and when you received original notice of the debt collector’s intention to collect. For example, you’d mention the date of a letter or the date and time of a phone call.
Other Tips for Dealing with Debt Collectors
When dealing with collection agencies, it is good to remember that most states require them to 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 a debt.
Note: You do NOT have the legal right to validation under the FDCPA when dealing with an original creditor.
They may choose to validate the debt 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 the debt 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. They must also notify the credit reporting agencies that the account is in dispute.
For more information on removing collections from your credit report check out our guide:
How to Remove Collections from Your Credit Report
Other Legal Rights
You may also have additional rights under the Fair Credit Billing Act (FCBA), and possibly your state’s laws.
Also, if you demand debt validation from a creditor who is already listing a derogatory item on your credit report, they are required to note that account as “disputed by consumer” (or similar language).
They may NOT place a new listing or verify a current listing with the credit reporting agency until they have provided you with validation. It’s smart to familiarize yourself with these laws so you can stand up for yourself when the time comes.