Debt Validation in Collections & the Legal Process
Debt validation (or verification) can be an important step in determining whether you have grounds to contest a debt that you allegedly owe. The Fair Debt Collection Practices Act (FDCPA) provides the legal basis for this process. You will find information regarding debt validation in the first letter that you receive from a collection agency or soon thereafter. The agency must tell you how much the debt is worth and to whom you currently owe the debt. You then will have 30 days to dispute the validity of the debt. If you do, the collector will need to send you verification of the amount of the debt. Also, if the original creditor is different from the current creditor, the collector must give you the contact information of the original creditor.
You should be aware that failing to take action within 30 days means that the debt will be presumed valid. The collector then can proceed with the full scope of collections efforts. In some cases, a debtor may want to request validation of only part of a debt, which is also possible.
Requesting Validation
A debtor can send a letter to the collector in which they dispute the validity of the debt and ask for documentation to verify it. They can also (or instead) ask for the name and address of the original creditor. Regardless of whether a debtor takes either or both of these steps, the collector must stop collections efforts during the validation process. It must mail the information to you before resuming.
You should be aware that an attorney who is handling debt collection may be able to take or continue other actions against you. For example, the attorney can move forward with filing a lawsuit and does not need to withdraw a lawsuit based on the debt during this time. The lawsuit is a separate procedure from the debt collection process. You will want to note and follow any deadlines specific to the lawsuit, which may be different from deadlines in the collections process.
Why Seek Validation
The process of validation can take a longer time than you might expect. If you are able to restore your finances during that time, you may be able to pay back the debt or negotiate a repayment plan with the creditor before collections efforts resume. This can help take the stress out of the process.
Also, a collection agency may be handling a vast number of debts and may genuinely not know the details regarding a certain debt. These agencies usually purchase a debt “as is” from the original creditor, which may give them inadequate or incomplete information. Perhaps the original creditor failed to update its records after you paid off the debt, or perhaps it gave the debt buyer the wrong amount if you paid back part of it. Sometimes other forms of confusion can arise, such as when a collector confuses people who have the same name or live at the same address.
In the best-case scenario, the collector will be unable to verify the debt. This means that you may not need to pay the debt at all or may need to pay only part of it.
