Are debt collectors chasing you down about a delinquent account? While you may be inclined to just pay them what they owe to make the constant calls and letters stop, there’s a better option: debt validation.
Read on to learn more about why you should validate your debts before paying up, and how to do so using a debt validation letter.
What Is Debt Validation?
Per the Fair Debt Collection Practices Act (FDCPA), the burden of proof is on the debt collector to prove that you actually owe what they say you do. This means that they must have documentation on hand that confirms that they not only are legally obligated to collect on the debt, but it actually belongs to you and is within the statute of limitations for collection.
Otherwise, they cannot legally report the information to the credit bureaus for inclusion in your report. Furthermore, their collection efforts must come to a halt. And if the debt is already being reported, it must be removed promptly.
But how do you go about validating your debt? It starts by sending a letter to the collection agency, which halts the phone calls, texts, and possibly reporting (depending on when the letter is sent).
Why Should You Validate Your Debt?
If you have the funds to pay off the collection account, shouldn’t you just pay what the debt collectors say you owe and move on? Not necessarily.
For starters, if the debt doesn’t belong to you, there’s no need to pay it as the responsibility to cover someone else’s financial burden should not fall on you. And while it may be easier to just pay the debt, especially if it’s for a small amount, the FDCPA protects you from having to pay for debts that don’t belong to you.
Furthermore, you want to make sure that you’re not paying more than what’s actually owed. Debt collectors can be sneaky and inflate outstanding balances or tack on miscellaneous fees without having the legal right to do so. But by validating the debt, they’ll be forced to adjust your bill if there are errors to reflect the accurate balance.
Most importantly, debt validation either confirms or denies that you actually owe that particular collection agency because the account is now in their hands. In other words, anyone can pick up the phone or send a letter to you demanding that you pay off a particular account. But are they really the company that was designated by the original creditor to do so? Or did they actually acquire the debt from the original creditor or are they just a fraudster pretending to be someone they aren’t? If you do happen to encounter a con artist and you pay off the debt without validating it first, you’ll still be on the hook and they will be long gone with your hard earned money.
How to Validate Your Debt
When the collection efforts initially commenced, you should have received a notice in the mail from the debt collector within the first five days of initial contact. This notice should have included key details about the debt and communicated that the debt collector has legal rights to collect on the debt. It should have also contained verbiage stating that you have 30 days to dispute the validity of the debt before they take further action, including reporting it to the credit bureaus.
But what if the letter didn’t come in the mail? You still have a right to send a letter requesting that the collection agency validate the debt.
Draft up a debt validation letter.
Your debt validation letter should include:
- Your full name and address
- The date and time the collection agency initially reached out to you
- A statement requesting that they provide proof that you owe
View this handy template to help you get started.
Send the letter to the collection agency.
Once you’ve written your debt validation letter, it should be sent to the collection agency attempting to collect on the debt. Be sure to only forward over a copy of the letter and retain the original for your records. Also, send the letter via Certified Mail with a Return Receipt so you can know when it arrives at the debt collector’s physical location.
Await a response.
As mentioned earlier, collection efforts will come to a halt when the letter is received until they send you the proof you’re requesting. And don’t be surprised if the debt collector decides to take a step back and forward the account back over to the original creditor. This could happen if they don’t have the proof they need to legally collect on the debt.
But what if the debt collector never responds? Follow-up sending another letter requesting a response and re-iterating your rights under the FDCPA. In the package, be sure to include a copy of the original letter you sent over and a copy of the return receipt so they can know that you’re aware they received it.
Still no response? Notify the credit bureaus in writing that the collection agency has failed to respond to your validation requests so the entries can be removed from your credit report. Be sure to include any supporting documentation in the package you send over.
You can also file formal disputes with the credit bureaus. This will prompt them to reach out to the information provider (whether it be the original creditor or debt collector) to investigate your claim. If they fail to respond to the credit bureaus within the allotted 30-day window, the item must be removed from your credit report.
How to Move Forward If You Owe the Debt
You’ve taken all the necessary steps to validate the debt and the collection agency has provided proof that the debt is indeed yours and they have the right to collect on it. What’s next? Well, you have a few options:
- Ignore the debt. This is a common approach if the statute of limitations is almost up or you simply don’t have the funds to remit payment at the moment and would rather face the risk of being sued than paying up.
- Request a payment arrangement. Most debt collectors will work with you if you would like to break up what you owe into smaller chunks. Remember, chances are they only paid pennies on the dollar for the right to collect, so some income is better than none on their behalf.
- Request a settlement. If you have a lump-sum of cash on hand, the debt collector may agree to settle the debt for a fraction of what you owe. Just be sure to get this in writing so you can avoid being sued later on down the line.
- Negotiate a pay-for-deletion. Under this arrangement, the collection agency will remove the negative mark from your credit report in exchange for payment. This agreement should also be executed in writing so you’ll have proof in case the debt collector doesn’t uphold their end of the bargain.
The Bottom Line
Debt validation is one of the more effective tools in your arsenal of consumer protections under the FDCPA when dealing with debt collectors. And by taking the time out to draft up letters and do your due diligence, you could save yourself time, money, and headaches when dealing with delinquent debts that may or may not belong to you.