Have you received a letter in the mail from a collection agency and want to send a debt validation letter to validate the debt? CFPB stated that one in four consumers feel threatened when facing debt collectors. Or do you have lots of collection accounts on your credit report? You may wonder where those accounts came from, especially if they have been sold more than once. I do not know about you, but I know that I am not able to remember specific details of accounts that I had more than 2-3 years ago. If this sounds like you, you may be wondering how you can get everything dealt with so you can move on.
Throughout this article I will discuss what debt validation is, how it works and what rights you have under certain federal and state laws. In addition to ways you can validate your debt and if and when you should hire a company to do it for you.
Validating your debt is always a good idea. However, you should keep in mind that any contact with a debt collector could potentially reset the clock on the statue of limitations for that specific debt. Before moving forward you may want to look at your total financial picture and be sure that if you choose to validate the debt, it will not cause you any financial trouble in the future if you have to pay it. Use our free Statute of Limitations Calculator to estimate the statute of limitations in your state.
Once you're ready to validate the debt, you can use this free debt validation letter that we created that is based on CFPB's letter templates.
Some instances when it can be beneficial to validate a debt include:
If you choose to validate the debt, and the debt collector is able to respond with proof that it is yours, you can try negotiating the balance. Many creditors want to recoup as much money as possible. Most creditors will take a settlement as a lump sum payment if it resolves the account. You may even go as far as requesting a pay for delete if it is the only negative item on your credit report. Just be sure to get any negotiations with the creditor in writing, this will protect you in case they try to sue you for the full amount in the future.
What is Debt Validation? Debt Validation is just as it sounds. It is the process of validating a debt that a creditor says you owe. While the legal definition (§ 1006.34 Notice for validation of debts) comes off as broad, the act itself is pretty straight forward and easy to manage. Debt validation can apply to both accounts that a person or company is trying to collect on, or that collection account that has been on your credit report for a while and you are not quite sure what it was from. In laymen's terms, the company that is saying you owe the debt has to prove that you actually owe it and are responsible for the repayment of that debt.
Generally speaking, whenever your debt changes hands (i.e; a debt collector your debt to another agency or the original creditor sells to a debt collection company) they must send you a Validation Notice. This letter must include:
When it comes to validating your debt, in most cases you have 30 days from the date you receive your first collection notice to send the debt validation letter. When doing a validation it is best submit the request in writing and get a Return Receipt with it. Getting a return receipt allows you to know that the creditor or debt collection agency has received your dispute or validation letter as well as what date and time it was received.
Now you wait. In most cases you can expect a response within 30 days from when they received your response. However, under the Fair Debt Collection Practices Act (FDCPA), there is no legal requirement for how long a debt collector has to respond to you. They can take as long as they want. There are a couple of situations when it may take some time to receive a response:
Debt validation companies are essentially just companies that work on your behalf and do the validation process themselves. They can be in the form of a normal company, or there are also many law offices out there that provide debt validation and debt defense.
Please understand exactly what these companies are doing for you. For example, Litigation Practice Group pitched debt invalidation, but has gotten sued and filed bankruptcy. Secondly, is the company you are hiring try to validate valid debt?
Credit repair is the act of fixing errors on your credit report. This can be in the form of correcting an address that you have never lived at, or disputing any negative item that is damaging your credit that cannot be verified.
In a sense, debt validation and credit repair are the same thing. Many companies do both credit repair and debt validation. According to the FDCPA, all information that on your credit report must be verifiable and accurate. It is able to be removed if the information cannot be verified. This applies to anything on your credit report.
That does not mean that you can go and dispute every negative item on your credit report. You are eligible to submit disputes for items that are negative. The Fair Credit Reporting Act states that the credit bureau’s are not obligated to look into disputes if they believe that the disputes are frivolous or irrelevant.
There are many companies out there that claim that they “fix” you debt. If they say this, they are probably not legitimate. There are lots of companies that are above board and really are worth the time and money, especially if you have a lot of accounts that you need help with or do not have the time to converse with each creditor.
Under the FDCPA all debt validation and credit repair companies must be:
All debt validation requests can be made by you for free of charge, the only situation when you may need to hire a debt validation company or a debt defense attorney is if you believe that the collector is breaking an debt collection laws. When shopping around for a law firm or validation company you should check their reviews on The Better Business Bureau and Google. If they are highly rated and have resolved any disputes successfully then you can fee confident in your decision.
Since I was 18 years old I have had my fair share of encounters with debt collectors and negative items being reflected on my credit report. I have done many things to attempt to repair and improve my credit score. I have worked with credit repair companies and tried to fix things myself. In my experience it was much easier to try to dispute items directly with the creditor or the credit bureaus.
There was one particular instance when I was 22 years old I canceled my gym membership and I received a cancelation email from the gym. About 2 years later I got a letter from a debt collection agency that said my gym membership had been charged off and sold to them as a bad debt. 30 or so days later I had a new collection account on my credit report.
After that, I sent the debt collection agency a letter saying that I had canceled the gym membership and I attached a copy of my validation email. They never responded. 6 month later the collection account was still on my credit report. I filed disputes with all 3 credit bureaus and attached copies of the email from my old gym as well as all the correspondence I had with the debt collector. Within 30 days the account was removed from my credit report and I was good to go. I have not heard anything about this debt since. The moral of this story, is save all documents that pertain to any money you have borrowed, or memberships you may have canceled because you never know when you may need them.
