Collection agencies are required by the Fair Debt Collection Practices Act (FDCPA) to provide proof that the debt is legitimate, that the debt is legally yours, and that the collector has the authority to collect on behalf of the original creditor.
The Federal Trade Commission enforces the FDCPA and prohibits deceptive, unfair, and abusive debt collection practices.
If a debt collection agency contacts you, the collectors must send you a written notice within five days of the initial contact. If you have not received a debt validation letter, you may request one by writing a debt verification letter.
A debt verification letter can help you figure out how much you owe, who you owe it to, and how old the debt is. A debt verification letter, as opposed to a debt validation letter, is sent by you to the debt collector.
Debt verification letters and debt validation letters are often used interchangeably, which can be confusing. These terms refer to either the letter a borrower writes to a collection agency or the letter they get back from the agency detailing their debt.
To keep things simple, we'll call the letter written by the borrower the debt verification letter and the one received from the collection agency the debt validation letter.
This information can help you confirm that the debt is valid, that you haven't already paid it, and that the debt collector is authorized to collect it. It also works as a debt dispute letter if you suspect the debt is not yours.
Use certified mail with a return receipt requested when sending the debt verification letter. This will help you prove when you sent the letter and when the debt collector received it.
You can use debt verification letters to pause collection efforts or know more about the debt if you intend to pay it off.
When you send a debt verification letter to a collector, the company must legally respond with a debt validation letter supporting its claim. The claim will most likely be dismissed if it cannot or will not send you a debt validation letter; in this case, they are not legally allowed to make further collection attempts.
Not only do debt collectors make genuine mistakes, but there are also instances where a collector contacts you despite knowing that a debt is invalid in order to see if you will pay. Fake debt collection notices are often mailed, and phone calls have been made in an attempt to defraud consumers out of their hard-earned money under the guise of an invalid debt.
A debt collector may not be able to provide proof of debt ownership if the debt is several years old. It can also be challenging for a debt collector to prove ownership of a debt they purchased from the original creditor. Writing them a letter to confirm the debt and asking them to stop contacting you about it could prove very effective in such cases.
The statute of limitations is the time limit within which a creditor or debt collector can sue you to recover the money you owe. Credit cards, mortgages, auto loans, medical bills, and student loans have a statute of limitations.
The statute of limitations differs from state to state. Your overdue debt becomes "time-barred" once the statute of limitations window expires. A debt collector cannot take you to court to collect a time-barred debt because doing so would be illegal.
A verification letter will help you figure out how old the debt is. Even if you do owe the debt, the collectors cannot take legal action against you if the statute of limitations has passed.
Sending a debt verification letter can help ensure that you do not bring back an old debt that has passed the statute of limitations. Making a single payment or agreeing to a repayment plan can revive an old debt and reset the statute of limitations on it.
A request to verify a debt must be made in writing to be legally binding. Basically, you will be telling the collectors you are responding to their attempt to collect from you, that you do not recognize the debt, and you are demanding they prove you owe it.
You will also be letting them know if they cannot verify the debt, you want them to stop the debt collection process.
You must dispute the debt within 30 days of the collector's initial contact. After receiving the letter, the collection agency is obligated by federal law to reply with the above mentioned details. They must do so in writing before continuing their attempts to collect payment.
After the 30-day mark, you can still send a verification letter, but the outstanding debts are assumed valid, and the collectors can continue their collection efforts before responding to your request.
The Consumer Financial Protection Bureau also has a list of sample letters available that you can use. You can also hire a credit repair company to send and manage dispute letters on your behalf.
If a collection agency cannot provide debt verification, they must stop contacting you. They must also ensure any negative reports related to the collection are removed from your credit report. If the company does not do so, you can notify the credit bureaus and request that they investigate the matter.
You have a right to sue a debt collector in federal or state court if the collector fails to verify the debt but still pursues payment. Actual damages, attorney fees, and court costs may be awarded to you in addition to any monetary judgments ($1,000 per lawsuit).