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

“Did you know millions of Americans live with debt they cannot control?  That’s why I’ve developed this unique new program for managing your debt — it’s called “Don’t Buy Stuff You Can’t Afford.”

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.

Maybe we should all be thankful though; think about how many disappointing Christmas mornings we would’ve had the past decade if we actually had to pay for the stuff we bought.

Abercrombie & Fitch Aeropostale Aerosoles Aldo American Eagle American Greetings Ann Taylor Apple April Cornell Armani Exchange Banana Republic Barnes & Noble Bath & Body Works BEBE Benetton Best Buy Bloomingdales Bombay Company Boscovs BOSS Bostonian Shoes Brooks Brothers Brookstone Build-A-Bear Burberry Caswell Massey Champs Sports Chanel Charles David Chicos Childrens Place Cingular One Cingular Wireless Circuit City Coach Coldwater Creek Costco Crabtree & Evelyn CVS Dante Tuxedo Delias Diesel Dior Disney Store DKNY Dolci & Gabbana Easy Spirit Emporio Armani Express Men Express Women Fashionbug Feet First Fendi FootAction USA Footlocker Forever 21 French Connection Gucci GAP Gap Kids Guess GNC Gymboree GameStop Georg Jensen Hollister Home Depot Hot Topic Illuminations Jimmy Choo JCPenney J Crew J. Jill

KMART Kohls Kay Jewelers Kenneth Cole Kids Footlocker Louis Vitton Lane Bryant Limited Limited Too Lids Lowes Linens-N-Things Lucky Brand Jeans Lady Footlocker Littman Jewelers MACYS Mandees Modells Motherhood Maternity MAC Cosmetics Max Studio NY&Co Nordstrom Nine West Neiman Marcus Nicole Miller Office Depot Old Navy Polo Ralph Lauren Pet Smart Pottery Barn PacSun Payless Shoes Pier One Radio Shack Restoration Hardware Saks Fifth Avenue Sephora Steve Madden Sears Sharper Image Sunglass Hut Suncoast Starbucks Sterling Optical Spencer Gifts Select Comfort Sony Style Toys-R-Us Tiffany & Co Talbots Target Toys-R-Us Things Remembered T-Mobile Trade Secret Timberland Victoria’s Secret Vitamin Lab Verizon Wireless Waldenbooks Walmart Wentworth Gallery Williams-Sonoma Wilsons Leather Wet Seal Yankee Candle Zales Jewelers

There are definitely more stores out there. If you know of one, add a comment.

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.

YOUR NAME
YOUR ADDRESS LINE 1
YOUR ADDRESS LINE 2

MONTH DAY, YEAR

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

THEIR NAME,

I know you’re extremely busy, but I hope you can find time to consider this request for me. I have been a COMPANY NAME customer since YEAR and during that time, I have enjoyed my experience with your company.

I am contacting you today to see if you would be willing to make a “goodwill” adjustment to your reporting to the three credit agencies. I have NUMBER late payments on the above referenced account that date back NUMBER months. Since that time I have been an exceptional customer paying every month on time.

Because of my overall exceptional payment history with your company over the last NUMBER years, I would like you to consider removing the negative payments from my credit report. I have been a very happy customer in the past and hope to continue a long relationship with COMPANY.

I look forward to your reply.

Sincerely,

FIRST AND LAST NAME

Two of the perpetrators? Maybe.

Depending on their slant/bias, the reasons will be:

Consumers - “Consumers shouldn’t have taken credit that was easily available to them.  They wanted a Lexus, but could only afford a Kia, and are forcing financial institutions that were just trying to make a buck into bankruptcy.”

Companies - “People are honest, hardworking folks.  It’s those greedy corporations and fat cats up North that prey on us.  Most people work 23 hours a day and don’t have the time to read contracts or understand what they’re signing.”

Government - “BUSH DID THIS!  People need to elect McCain/Obama/Santa Claus in November to raise employment, fix the economy, and make America great again.”

Big picture aside, generally speaking people have less money, work longer hours (if they can find a job), save less, and are much more concerned about their financial situation than they were 5 years ago.  Why do you think we’re in the situation we’re currently in?  Do you subscribe to one of those agendas above?

Dislike Bush?  Think John Q Public is stupid?  Greedy companies?

I have my own “quotes” on the topic.  It’s a conversation I witnessed.  It took place about 2 years ago at a major department store while I was checking out at the cash register with my wife.  Now that I think about it, it was the last time I went shopping with my wife.

Cashier (to customer in front of us): “Hi, did you find everything alright?”
Customer checking out: “Yes ma’am, I just needed these socks for my husband.”
Cashier: “What would our husbands do without us? (laughter)”
Customer: “Yeah, darlin’. (laughter)”
Cashier: “Your total is $6.53.  Honey, did you want to go ahead and sign up for STORE’s credit card today, you can save an additional 15% on your purchase?”
Customer: “I tried signing up for ANOTHER STORE’s credit card the other day, they said I was declined.  I might as well try my luck with you guys, too.  Why not?”

A credit card — financial contract — loan — was offered to a lady that bought socks.  On the other hand, the lady wanted to give it a try.  After all, that 29% APR on that store credit card would’ve saved her $1.

I blame the socks:  the solution.

How it Works

When you use a loan to pay off your debts, you must first obtain a loan large enough to cover the total amount of your debt. If you have credit card debt that totals $4,000 you need to obtain a $4,000 loan. Once you have received the loan, you then disburse payments to each of your creditors. Your credit card debts are paid off and you now make a single monthly payment your lender.

Benefits

Perhaps the most noticeable benefit that you receive from using a loan to pay off your credit card debit is that you no longer have to be hounded by creditors. If you were behind on your credit card payments, you are now caught up. The harassing phone calls will stop as soon as the creditors receive your payment.

Another benefit of using a loan to pay off credit card debt is that you now make a single monthly payment towards your debt rather than several payments. Consolidating your debt in this way makes it easier to budget and manage your money each month.

Depending on the interest rate for your loan, it could be less costly to repay the loan than it would be to repay your credit card debts. This lower cost gives you additional freedom in spending your money.

Drawbacks

You must keep in mind that using a loan to pay off your credit card debt is not reducing your debt loan. Instead, you are only reshuffling the debt in a manner that makes it easier to manage.

If you have been late on your credit card payments, your credit may be negatively affected. This will have an effect on your ability to obtain a loan. If you are more than thirty days late on a single credit card payment, you face the risk of being denied for the loan.

Unless the loan interest rate is lower the lowest interest rate of your credit card, using it to repay your debts isn’t worth it from a financial standpoint.

Several factors come into play when you make the decision to repay your credit card debt using a loan. You must evaluate each of these factors according to your situation to make the best decision.

Some Debt is Good

Some kinds of debt are actually investments. It might sound preposterous, but it’s true. If you used debt to finance something whose value will appreciate or contribute to your financial health, then you’ve incurred good debt.

What are some examples of good debt? A student loan borrowed to finance education. It’s been proven that people with college degrees make more money over their lifetimes, so a student loan is an investment in yourself. A mortgage loan used to purchase a home is good debt since homes typically appreciate in value.

And Some Debt Is Bad

Now you know there’s good debt. You can incur bad debt too. Anytime you accumulate debt to pay for something that can be consumed, the debt it bad. Once you’ve consumed the item, there’s no value in it, yet you’re left with debt to pay for something you no longer have. Bad debt is financially unhealthy.

Because of the things that credit cards are used to purchase, credit card debt is often bad debt. When you use credit cards to purchase everyday items that you will use or that will depreciate in value soon after they’re purchased, you have accumulated bad debt.

Auto loans, by definition, are bad debt, because the car will depreciate in value as soon as you drive it off the lot. Even though transportation might be a necessity, the auto loan is still bad debt.

To maintain your financial health, you must make sure that you don’t accumulate too much debt, whether it’s good debt or bad debt. It is possible to become overloaded with debt, even good debt, to the point that you struggle to make ends meet.

Like their high administrative fees for example. Debt settlement companies charge hundreds of dollars and fees which they never tell you about, because you don’t ask. Most consumers that use debt settlement as an option are so desperate for relief that they put their trust into the companies without exploring other options or digging deeper to find out how the company operates. They usually don’t find out about the fees, until it’s too late.

Not only do debt settlement companies charge you high fees without ever telling you, they also use your monthly payments to fund these fees before sending a single penny to your creditors. Months go by, your credit cards are reported as thirty, sixty, and ninety days late, and your credit score plummets. But this is exactly what the debt settlement companies want.

To settle your debts, these companies wait until your debts have fallen behind a few months, then they contact your creditors to negotiate a settlement. Debt settlement banks on the fact that your creditors are more willing to negotiate after you’ve been late for a few months. Sometimes this works, and sometimes it doesn’t. If it doesn’t, your creditor could end up charging off your account. A settlement hurts your credit score. A charge off hurts it even worse.

Meanwhile, you continue to send your payments to your debt settler. You think your debts are being paid. Actually, they’re not. Your creditors are getting impatient. You may receive phone calls and letters from your creditors, which you have been advised to ignore. Your creditors are fully within their rights at this point to file suit or bring judgment against you. In either of these cases, you could end up paying your creditors far more than you owed to begin with.

Before you sign an agreement with a debt settlement company, make sure you have all the facts. Find out about any fees they charge and how they work with your creditors. If a company advises you to stop paying your credit cards for any amount of time, run the other way. Debt settlement can end up hurting your credit a whole lot more than it helps.