One important aspect of the Federal Debt Collection Practices Act is the section regarding debt validation. As a protection to consumers who are in dispute with debt collectors, the federal government allows consumers to challenge the validity of any debt claimed by a collection agency. This topic can be found in The Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 which states:
“(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing –
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-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 the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.”
What this all means in layman terms is that if you write a letter to the collection agency disputing their claim within 30 days of receiving their initial letter, they must show you written proof that you owe the aforementioned debt(s). To make the proof legitimate, they must include the following:
- a copy of the original signed credit card application or financing agreement
- complete payment history from the original creditor
- proof that said collection agency has been assigned to the debt
At the same time send a letter to the credit bureaus disputing the information involving the collection account. If the collection agency fails to write back within 30 days, but the credit bureaus send you a letter saying the debt it verified, you can send another letter to the credit bureaus claiming the collection agency did not respond to your request for debt validation, and thus has not complied with the FDCPA. Ideally the credit bureaus will remove the collection account(s) at this time because you failed to receive validation of debt despite the credit bureau reporting it as verified.
If they don’t cooperate, you may have to write a new letter threatening a lawsuit for willful non-compliance. Of course you don’t want to take it that far, especially if it’s not a large amount or too damaging to your credit. But this is one way to stave off the debt collectors and potentially solve a big problem with a little bit of legwork.
You may be out of luck also if the collection agency is diligent and gets the material you ask for in a timely fashion. If they validate the debt you will have few options but to pay the debt or risk a charge-off or potentially a lawsuit. Either way set aside a folder with all the original documents you use to state your case. Be careful how you approach both the debt collectors and the credit bureaus, and if you aren’t familiar with the law, it may be wise to seek legal help before pursuing a lawsuit.
