Collections practices are notorious. Consumers are hounded for payment sometimes by all means necessary – legal or otherwise. Usually, such measures are not undertaken by creditors themselves, but rather by agencies that specialize in collecting money from debtors.
Sometimes these agencies do not have the authority and/or verification of the debt to collect from you legally, and by exposing this truth you can save yourself from making unnecessary payments.
Debt validation can be a complicated process, so let’s start at the beginning. What is a debt collector? Creditors usually do not have the time and resources necessary to chase down the debtors who owe money to them. Instead, a debt collections agency usually picks up the slack, either by being assigned your debt by the creditor, or by purchasing your debt for a very small price.
These days, buying your debt is much more likely. In fact, shares in collections agencies even are traded in the stock exchange!
For legal purposes, any entities that are not original creditors – including lawyers – are considered collectors. Lucky for you, collectors must adhere to the guidelines of the Fair Debt Collection Practices Act (FDCPA), which will be the basis of your debt validation proceedings. It applies even to those collectors who legally have bought your debt (i.e. they still do not become your “creditor”.)
Debt validation is a process of forcing debt collectors to verify the validity of the debt in question, as well as their attempts to collect. Under FDCPA, the collector bears the burden of proof. Generally, debt collectors must be able to prove that:
- They own the debt legally and have been authorized to collect it from you.
- The full amount of the debt that they are pursuing is accounted for and documented by your original creditor.
- They can provide a copy of the original legal contract that you signed with your creditor.
The following is a step-by-step guide of actions to take to demand your right to debt validation:
- Send the collections agency (or lawyer, etc.) a certified letter asking them to validate your debt. Allow them 30 days to respond to your request. If they fail to do so, they are in violation of the law.
- Meanwhile, if you do not believe they have the right to collect from you, send the credit bureaus (Experian, Equifax, and TransUnion) a certified letter disputing collections actions on your report.
- If the collections agency responds in writing with proof of the three FDCPA requirements listed above and you wish to pursue your dispute further, you may find out whether or not they are authorized to collect in your state. If they are not, write another letter stating the violation and threaten to sue if they do not both cease collections efforts and alert the credit bureaus.
- If the collections agency responds in writing and does not provide sufficient proof, write them another letter specifying their violation of FDCPA. Tell them either to cease collections efforts and alert the credit bureaus, or you will file a lawsuit. Allow at least two weeks for a response, and then follow through with your threat in small claims court.
Most collectors will give in before you will have to get the law involved, and some cases may be much easier than others. For example, remember how collectors either may buy or be assigned to your debt? If a collector has been assigned your debt, they inherently do not “own” your debt and therefore cannot prove your obligation to pay (unless there is a clause in your original contract). Similarly, outright deceitful collections agencies probably will want to rid themselves of your situation as quickly as possible.
It should be noted that creditors may take legal action against you, and so it almost certainly is not in your best interest to just ignore a debt that you think cannot be proven. If you fail to take action and demand proof (or lack thereof) from a collections agency, it really does not matter what you believe to be just and accurate. You still may find yourself with a judgment against you.
Attempting debt validation might sound a bit daunting, but the financial benefits that you may gain from enforcing your rights certainly make it worthwhile for many people. FDCPA and contract law usually are on your side, and if a collections company lacks proof of your obligation to pay, well then... you might as well not.
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