Unfortunately for many of us, repairing credit often involves dealing with collection agencies. Debt collectors get a bad reputation because of the questionable tactics some of them use to collect the debt, sometimes crossing over into harassment. Of course, not all debt collection companies use unethical practices, and there are laws in place to protect consumers from such tactics.
In fact, the FDCPA (Fair Debt Collection Practices Act) sets several protections for consumers and makes some guidelines that can benefit your credit repair efforts as long as you know your rights and aren’t afraid to lay claim to those rights. One way you can take advantage of the FDCPA is by sending collection agencies a “Debt Validation” letter.
Why Seek Debt Validation?
According to the FDCPA, a collection agency must verify your debt or else it is considered invalid and they can’t report it to the credit reporting agencies. If they can’t verify the debt, they can’t attempt to collect the debt and they can’t attempt to contact you about the debt, either.
If a debt collector doesn’t verify your debt, and reports the debt to a credit reporting agency anyway, then you can take them to small claims court and receive $1,000 from them as well as additional damages.
How is a “Debt Collector” different from the original creditor?
The difference between a debt collector and an original creditor is important, because only a debt collector is subject to the FDCPA. According to the law, a creditor is only the original entity that issued you the loan directly. A debt collector is defined as an entity that the creditor has hired to collect the debt, or an entity that has purchased the debt from the creditor.
If a debt collector has purchased the debt from your original creditor, they are not considered a creditor by law; they are still considered a debt collector, and as such are subject to the FDCPA.
How to write a debt validation letter
To write an effective debt validation letter, the most difficult part is finding the correct address to send it to. Once you’ve hunted down the correct address, there are several free template letters you can use.
What must a debt collector provide in order to verify a debt?
A debt collector only needs to provide one of the following in order to verify a debt:
- A copy of one of your canceled checks from the original creditor
- A copy of your original signed credit agreement
- A statement from the original creditor
- Signed proof that they’ve been assigned the debt or that they own the debt
If the debt collector provides you with one of these items as verification of the debt, then you need to try to settle the debt with the collector.
What happens if a debt collector doesn’t verify a debt?
Once you’ve mailed your debt verification letter, you should give the debt collector 30 days to respond, because this is the amount of time in which they are required to validate the debt. You can expect one of three responses:
- A letter saying they’ve received your request for verification, notifying you that they’ll send a response soon
- Verification of the debt
- No response
If you don’t get a response within the 30 day period, or their response doesn’t satisfy the requirements for a debt verification, send them a second letter demanding that they remove the debt and stop reporting it to the credit reporting agencies. Most of the time, the collector will comply with this request; if not, then you can file a lawsuit in small claims court.
Help with credit repair
DIY credit repair takes a lot of time and patience, but it can definitely be worth the effort. If you’re curious about having a credit repair company complete these tasks for you, contact Lexington Law for a free credit consultation: 1-(855) 620-5875.
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