Debt Collectors: The Importance of Debt Validation
Debt Collectors: The Importance of Debt Validation
If you've been contacted by a debt collector, you've probably experienced the feeling of trepidation wash over you. The debt collection road is rocky, rife with pitfalls that can lead to harassment, intimidation, and a downward spiral of your credit score. It's very tempting to avoid all that by coming to a hasty agreement with the debt collector on the other end of the phone line. Yet, there are several important reasons why you should sit back, take a deep breath, and then ask the debt collection agency to validate the debt.
What is debt validation? It's a process whereby the debt collection agency proves that you owe the debt. This is important because, by the time third-party debt collectors come calling, they often don't have the documentation to back up their claim that you owe money. Perhaps the original creditor didn't give them the documents, or maybe the debt collection agency has purchased what's called "junk debt," money that the original creditor has written off as a loss and sold for pennies on the dollar.
According to the federal Fair Debt Collection Practices Act (FDCPA), within five days of contacting you, a debt collection agency has to send you a written notice stating the name of the creditor, the amount you owe, and your rights to dispute the debt. Requesting debt validation is a way to dispute the debt. By sending them a validation letter within 30 days of initial contact (via certified mail with return receipt requested), you are placing the burden on the debt collection agency to prove that you owe the money.
This process keeps the debt collection agency honest. While they're gathering the documentation, they're prohibited from contacting you. Often, a debt collection agency simply doesn't have the necessary proof, and they'll stop attempting to collect the money. If they do have substantiation for the debt, they must send it to you in writing. Then, you can check to make sure that your records and theirs are in agreement, and that they haven't added on extraneous (and illegal) charges. You can also make sure that the statute of limitations hasn't run out. Each state's law is different, but a debt collector can no longer try and collect a debt older than the statute of limitations.
While you're waiting for the documentation, you can come up with a plan of action. If you think you owe the money, you can decide what type of payment plan you can live with. Keep in mind, though, that the FDCPA outlines illegal debt collection behavior, and that if a debt collector crosses the line, you are entitled to compensation. A fair debt attorney should take your case at no cost to you, and could get you up to $1,000.
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