Debt Validation Letters: A Comprehensive Guide with Templates
It can be quite stressful if a debt collector suddenly contacts you, telling you that you are behind an alleged debt.
It is worse when you don't even recognize the debt.
Knowing your rights in this situation is critical to protect yourself from getting into a legally vulnerable position by simply trying to get out of the debt.
If a debt collector contacts you regarding a debt you are unsure about, make sure not to make any commitment to repay it or provide any further information before you receive a debt validation letter from the debt collector.
What is a debt validation letter?
A debt collector will send you a debt validation letter to confirm that you owe them money. This letter specifies a specific debt, the amount owed, who you owe it to, and when they want you to pay.
If a collection agency contacts you regarding a debt, they must send you a written notice within 5 days of the initial contact. You can request a debt validation letter from them if they don't.
In accordance with the Fair Debt Collection Practices Act (FDCPA), you can request debt collection agencies to validate the debt. Following is a sample letter that you can use to request the creditor/collection agency prove that the debt is actually yours and you are legally bound to pay that debt. However, make sure you send the letter in registered mail.
Requesting a debt validation letter is a legal and quick way to establish legitimacy before paying or negotiating with the debt collector. Debt validation letters are created to protect customers from unfair debt collection practices.
You can send an official letter of request to stop debt collection to the collection agency if you do not want them to contact you to collect the debt and want to talk to the original creditor directly.
You can also ask that the debt collector only contact you through your lawyer, or you can specify which contact methods are permitted.
Is a debt validation letter and a debt verification letter the same?
A debt validation and a debt verification letter are not the same.
A debt collector sends a debt validation letter to prove that you owe them money. A debt validation letter outlines the specifics of the debt.
The debt verification letter is a letter you compose and send to the debt collector to dispute the debt (if you actually do not owe it or owe the amount the debt collector claims).
However, when the collection agency fails to answer your debt verification request with the required proof to verify your debt, you can send a debt collection dispute follow-up letter to remind them about your query.
Why are debt validation and debt verification letters crucial?
These letters are crucial because debt collection mistakes are common.
You don't want to pay a debt you don't owe or unintentionally resurrect an old debt that has passed the Statute of Limitations. You also don't want to be a victim of a collection scam.
What occurs after you request a debt verification letter from your debt collector?
The request for a debt verification letter must be sent to the debt collector within 30 days of obtaining the debt validation letter.
If you request a debt verification letter within 30 days of their initial contact with you, the debt collector must cease attempting to collect the debt, and they must then wait until they can confirm that the debt is yours.
After 30 days, you can request a debt verification letter, but the debt will be assumed valid. While responding to your request, the debt collectors may continue to seek payment.
How can I demonstrate that the debt collector received my verification request?
When sending your debt verification request, use certified mail with the return receipt requested. Sending the letter via certified mail gives you proof of when it was mailed and received. You can use the return receipt as proof that the debt collector received your letter.
If you do not receive the return receipt, you can use the tracking number on your certified mail receipt to check the letter's status with the United States Postal Service.
When is it appropriate to request a debt validation letter?
In these cases, you should request a debt validation letter -
To determine whether or not the debt is truly yours
A debt may be listed as yours at times, but this could be due to an error in record keeping or you being a victim of identity theft. A debt validation letter can prove whether or not the debt is yours.
Mistakes can and do happen, and failure to demonstrate you're the person owing the money will cause them to cease contacting you and instead go after the person who owes the money.
If the debt is really old
If a debt collector contacts you regarding a quite old debt, even if you believe you don't owe some or all of the amount demanded, you can request documents from the debt collector to prove you owe the money.
If they can't provide proper documentation to back up their claim, they must stop collecting from you and close their file.
If you want to understand the debt better
Debt collection agencies constantly buy and sell debts.
If you cannot identify the original creditor or the debt, a debt validation letter may be of assistance. Even if the debt collector contacts you for payment under a name you don't recognize, you may recognize the creditor and the debt and gain clarity.
If you want to improve your credit report
If you consider making a large purchase, remove any incorrect debt from your credit report. This will help you clean up your credit and get credit approval faster. A debt validation letter can assist you with this.
What should you ask for in your request for a debt validation letter?
Requesting for a debt validation letter is nothing to be scared about. By keeping a few things in mind, it can easily be done.
You should know that a debt validation letter is a lawful demand letter, and it requests that the debt collector either validates the debt or stops the debt collection efforts. You should have this in your mind while you write the letter.
Here is some basic information you should ask the collector in the letter -
- Name of the original creditor
- Calculation of whether the Statute of Limitations for collecting the debt has expired
- When the last action was taken on the account
Other than this, when you request a debt validation letter from your debt collectors, make sure to inquire about the following points:
Why the debt collectors think you owe the debt
Make sure to ask who the original creditor is and to obtain proper documentation proving that the debt is yours.
The debt's amount and age
Make sure to inquire about the amount owed, a copy of the most recent billing statement sent by the original creditor, the date of the last payment, and whether the debt is subject to the SOL.
Authority to collect the debt
Inquire whether this collection agency is licensed to collect money in your state. If you are confident that the debt is not yours, include any documentation that proves it is not yours.
You can conclude by threatening legal action if the debt collector violates the FDCPA or harasses you.
If you are dealing with a zealous debt collector, you can send them a Cease and Desist Letter to get them to stop harassing you or to stop an illegal activity immediately.
When should you avoid requesting a debt validation letter?
Requesting to validate debt is only a good idea in some situations.
Always remember that it should be used wisely; otherwise, there are high chances it will work against you. These are a few situations when requesting a debt validation letter should be avoided -
If the debt is approaching the Statute Of Limitations
Every state has a Statute of Limitations for how long the debt collector can collect the debt. If you have a debt and know it is nearing the Statute of Limitations and would like to let it expire, then you should avoid it.
Requesting a debt validation letter at this time is the worst thing you can do.
The letter would alert the debt collector that the debt deadline is approaching and raise the chances of them taking collection action against you. Other than this, if your request for a debt validation letter acknowledges the validity of the debt, it can revive or extend the Statute of Limitations in some states.
Always remember, even if a debt collector can't sue you for an expired debt, it can still try to collect it. Also, an expired debt can still show up on your credit report, preventing you from opening new lines of credit and affecting the interest rates you are offered in the future.
If a creditor or collection agency threatens to sue you after the SOL has expired, send them an expired SOL Notification Letter and let them know you are aware of your rights.
If you want to resolve the matter
If you are certain you owe the money and want to resolve the outstanding payments by negotiating with your debt collector and settling it for a lesser amount, asking for a debt validation letter is a bad move. It forces them to dig up the paperwork linked to your account.
It is possible that they would trap themselves in paperwork technicalities and be unable to produce the proper documentation to validate the debt. But it will be wise to pay attention to their chances of producing the requested documentation.
If this happens, the chances of them negotiating the payment amount would be very low since you made them jump through hoops.
If your account is currently with the original creditor
If you are about to request your original creditor to provide documents to validate the debt in the hope that they lost it and you won't have to pay it anymore, then it is a bad move.
You should understand that you are dealing with your creditor, not a collection agency. There are high chances that they have your documents that prove that you owe the debt.
This will target you as someone playing shenanigans, and your account could be marked for litigation rather than remaining with their (non-litigation) collection department or collection agency.
A debt validation strategy is effective, but there is no logic in thinking it is a one-size-fits-all solution for every situation.
Advantages of requesting debt validation
There are two main advantages to requesting debt validation-
- You can halt the collection agency's aggressive collection efforts temporarily.
- The information provided by the collection agency in response to your request for a debt validation letter may aid in the resolution of your debt.
Both of these allow you to take some time to carefully consider your options before taking the next step. It is critical to note that once the debt collector receives the request for a debt validation letter, they are lawfully required to respond before continuing their collection efforts.
You can file a complaint to the Consumer Financial Protection Bureau, the Federal Trade Commission, or the attorney general of your state if your debt collector ignores your request for a debt validation letter or harasses you.
What happens if the debt collector provides the validation of the debt letter?
Debt collectors may validate the debt. In this case, you can -
- Make a settlement proposal to satisfy the debt by only paying a portion of it
- Send a Cease and Desist letter requesting that they refrain from contacting you, and you will deal with the original creditor
- Do nothing and allow the SOL to run out
- Pay the entire debt amount
Usually, the first two choices are considered the best.
What if debt collectors refuse to validate the debt?
If the debt collectors fail to answer your request for a debt validation letter because they know the debt is invalid or lacks the evidence to prove it, you are not obligated to pay.
You can sue your debt collector in federal or state court if they don't verify the debt but still pursue payment from you. By doing so, you can recover about $1,000 per lawsuit in addition to actual damages, attorneys' fees, and court costs.
