Debt Validation Letter

Have you received a letter in the mail from a debt collection agency, claiming you owe them money?  If you look at the bottom of this letter, you’ll see verbiage telling you that you have the right to request validation of the debt — aka, proof you actually owe the debt.

This is a letter that can be sent to request validation from a debt collector.

YOUR NAME
YOUR ADDRESS LINE 1
YOUR ADDRESS LINE 2

Month Day, Year

THEIR NAME (OR DEPARTMENT)
ADDRESS LINE 1
ADDRESS LINE 2

Re: Account #XXXXXX

To Whom It May Concern,

I have received correspondence from your company notifying me that I allegedly owe money to COMPANY NAME. This is not a refusal to pay, but a notice that your claim is disputed.

This is a request for validation made pursuant to the Fair Debt Collection Practices act. By “validation,” I refer to reliable competent evidence that I have some contractual obligation to pay you the amount of money referenced in your previous correspondence.

I look forward to your reply,

Sincerely,
FIRST AND LAST NAME

Know your rights with debt collectors

You have many legal rights when being pursued by a debt collection agency. These rights come from the Fair Debt Collection Practices Act, or FDCPA, passed in 1977 to protect consumers from abusive debt collection policies.  Some of your rights include:

Contact methods
A debt collection agency can contact you by telephone (most common), mail, fax, or in person. They may only contact you between the hours of 8 AM and 9 PM, unless you give them permission to do so otherwise. If you inform the debt collector that you are not allowed to receive phone calls at your employer, they must also cease from contacting you there.

Providing you with a written notice
After you are contacted for the first time by a debt collector, they have to provide you with a written notice notifying you of the amount of money you owe, the creditor whom you owe the money to, and how you to proceed if you do not believe you owe the money.

Contacting other people
A debt collector can only contact people to find out where you live, where you work, and how they can reach you on the phone. Usually, they cannot tell them you owe a debt.

Not allowed to harass or intimidate
This leaves a lot to be interpreted, but debt collectors are not allowed to harass, abuse, or oppress you or any third party they contact about your debt. It is clear, however, that contacting you several times a day is not considered to be harassment.

Debt collectors are not able to say the following:

• If you do not pay your debt, you will be arrested. These are civil matters, not criminal – hence you cannot be arrested.
• They are an attorney (unless they are) or are a part of the government
• You have committed a crime.
• They will garnish your wages or seize your property unless they are not only actively prepared to do so, but that it is legal in your state to do so as well.

Debt collectors are not able to do the following:

• Provide credit bureaus with false information
• Send official looking documents as if from a court or government agency.
• Deposit a postdated check early
• Unless authorized to do so, collect an amount greater than your debt

For a fully copy of the Fair Debt Collection Practices Act, click here.

5 biggest mistakes in dealing with collectors

Nobody likes dealing with debt collectors, regardless if you actually owe the debt or not.  They can harass you day and night, leave messages with friends or family looking for you, and can be very intimidating.  It’s important though to keep your calm — that’s where we start our list:

1.  Lose your cool and screaming, yelling, or lying.
Lying is a big no-no.  “The check is in the mail” should even be avoided, unless, of course, the check really is in the mail.  If you choose to communicate with the debt collector over the phone, realize that your conversation is being recorded.  Any anger, lies, or “lack of character” can be used against you later.

2.  Communicate via letters, if possible.
It’s tempting to pick the phone up when you’re called repeatedly throughout the day and start making payment arrangements/settlements with a collector.  However, unless you’re able to (legally/technically) record the conversation with the debt collector, it’s simply a verbal agreement.  It’s your word against their recording, which more than likely will vanish very quickly.

So, get it in writing.  It’s next to impossible for a verbal agreement to outweigh a written one.  Make sure any letter outlying a payment agreement confirms that your payment is for X debt, and payment of X will pay the debt in full and stop any further collection activities.  You’ll also want to make sure that the agreement notes that your credit report will be updated accordingly.

Another major benefit in communicating by letters is that it allows you to keep your cool.  Think about a previous experience when you went to a car dealership and negotiated with the sales manager to get a deal you wanted.  Now, consider how easy it would’ve been doing it by letter.  Sure, it would’ve been a slightly slower process, but all commitments would’ve been in writing, you would’ve never had the ability to lose your composure, and you’d make sure you got the deal you wanted.

You’d have the same benefit with a debt collector.

3.  Give a debt collector your bank account information.
Never pay a debt collection agency with any payment method that can incur “recurring charges.”  This means your bank account, credit card, etc.  Of course, it’d be illegal to charge any of your cards/accounts without your permission, but funny thing — it seems to occur quite often.

Pay with a money order or cashier’s check.  Nothing else.

4.  Become intimidated.
They may try to appear like an established law firm with thick mahogany desks, manned by guys named Theodore Osmond III.  In reality, you’re dealing with a guy named Tucker who works in a cubicle and drives a Kia.  The point is — debt collectors are people just like you.  They have families, mortgages, watch the New England Patriots choke on Sunday, etc.

Keep this in mind when talking to them and don’t be afraid.

5.  Make commitments you can’t keep.
You got into debt presumably by underestimating the money you had going out, and overestimating the money you had coming in.  Don’t do it again when arranging to pay off a debt.  While you will be eager to pay off the debt quickly and to make the collection agency happy, accepting a payoff plan that you can’t stick to won’t help anything.  It’ll only set you back further.