Have you ever received a collection phone call or letter that seemed suspicious to you? It is not uncommon for people to get multiple collection letters for the same account. While it may happen from time to time, it is certainly not legal.
The Fair Debt Collection Practices Act passed by Congress in 2006 laid out a lot of the rules that would eventually make up the core of a validation letter. A validation letter is the way that consumers protect themselves from disreputable collection agencies.Original Debt is a debt that the original creditor is trying to collect on. For example, if you have a credit card through Bob’s Bank and Bob’s Bank is calling you about your account, then that is the original creditor collecting on the original debt.This is important because the rules of a validation letter do not apply to original debt. You can ask the original creditor to validate the debt, but there is no timeline in place that the creditor would be subject to.This means that the original creditor can use any means within the confines of the original credit agreement to collect the debt. In some cases, this can mean legal action that the consumer would be liable to pay for.
Assigning Versus Selling Debt
Creditors can assign debt to collection agencies and then monitor the collection process. The collection agency collects on the debt and then keeps a commission for the process. The collection agency does not own the debt, so you do not owe the collection agency the money directly. You would pay the creditor and not the collection agency.
To save time and get something for the old debt, a creditor will often sell debts to a collection agency. This means that the collection agency now owns the debt and can collect on it within the guidelines of the law.
This is where that definition of original debt comes in to play again. The collection agency may own the debt, but it is not the original creditor. You would owe the money to the collection agency directly, but it has to validate the debt when you request it.
What Is Validating A Debt?
Validating a debt means that you are asking that the collection agency or creditor prove that the debt exists, prove there is a balance owed on it and prove that it is legally able to collect the debt.
Remember that you can ask the original creditor to validate a debt if that is who is collecting, but the original creditor can take its sweet time in getting the information to you.
What Validates A Debt?
At the very minimum, you should get a copy of the original credit agreement, a copy of the last invoice statement and a legal document proving that the collection agency owns the debt.
If you want to be extremely thorough, then you are legally allowed to request a complete history of the payments and charges assigned to the account.
If the debt was assigned to the collection agency, then you will have to read your agreement to see if it says that you will be liable to pay the creditor or its assigned representatives. If your agreement does not say that you have to listen to assigned representatives, then you can ignore an assigned collection agency and deal directly with the original creditor.
Once the collection agency calls you on the phone, it has five days to send you a letter explaining the debt. You have 30 days from the receipt of that letter to send out a validation letter to the collection agency.
You can find sample validation letters online, or you can contact a debt settlement professional to help you put together a proper letter. When you mail the letter, send it certified mail and request a signature to prove that the company received it.
The collection agency has 30 days from the receipt of your validation letter to process your request and get you the validation materials. Once you receive the materials, you should have a debt settlement expert look them over to make sure the debt is legitimate.
If you do not get anything back from the collection agency within 30 days of it receiving your validation letter, then the collection process stops.
Keep Detailed Notes
As you can see, this is a very comprehensive process that relies on a lot of conditions to be satisfied. When you go through the validation letter process, you need to keep copies of everything and make notes on important subjects.
Keep everything in a file folder and make sure that folder is stored someplace safe. You may need your information later if the collection agency tries to collect again after it did not validate the debt.
Call our financial experts today to help you put together a professional validation letter and make sure that the debt you are being faced with is really yours.