Debt Validation Protects You From Deceitful Debt Collectors
In the past decade, the debt collection industry has changed dramatically, with many practices that would have been shunned in the past as unscrupulous becoming an everyday part of the debt collection process. Once, the companies that were owed the debt used their in house debt collectors to collect monies that were owed to them, but now the companies collecting debts probably purchased the rights to that debt from some other company. This separates the debt collector from the original purchaser and provides an incentive for the debt collector to collect the debt by any means possible.
Often, the debt that has been sold to a debt collection company is an invalid debt for any number of reasons. It could be because the statute of limitations has run out for collecting the debt. In other cases, the account has been paid or charged off, but the account is still listed as delinquent in the records purchased by the debt collection company. People can protect themselves from being contacted by debt collection companies asking about invalid debts by asking for debt validation.
What Is Debt Validation?
Debt validation is the process of ensuring the debt is correctly reported and enforceable for collection. The first step in the process is requesting the validation of the debt once you have been contacted by a debt collection company requesting the payment of the debt. The debt collection company must inform you of the debt that they are requesting you pay in writing telling you the name of the original debtor and the amount that is owed on the account. On this paperwork, the debt collection agency will inform you that you have thirty days from the receipt of the debt notification to ask for the validation of the debt.
A request for debt validation must be received by the debt collection company (even if they are using a currency trading strategy) within the timeframe provided for them to investigate hether the debt is actually valid. If the debt is contested, the debt collection company must retrieve records showing that the debt belongs to you and the total amount owed on the account as calculated by the original creditor. This proof of debt will be mailed to the individual seeking debt validation. This proof may include account statements from the original creditor or a copy of the signed agreement for the account showing that the account belongs to you.
If no proof has been provided showing that the debt is valid and you are the owner of the account, then that is a good indication that the debt collection agency is attempting to collect on a debt that is not valid. If you refuse to pay the debt collector for this account, the company’s only recourse is to take you to court for the monies owed and no company will do this without proof that you are the person that owes the debt. If no validation is provided, but the account still shows as a negative entry on your credit report, you can petition the credit reporting bureaus to remove the entry from your credit report due to the debt being invalid.
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The Fair Debt Collection Practices Act provides that you can request a validation of any collection account that is in dispute. In the case of Chaudhry v. Gallerizzo, 174 F.3d 394, 43 Fed.R.Serv.3d 1063 (4th Cir. 04/05/1999), the court ruled that the collector (or creditor) is only responsible for providing some record that they have your name spelled correctly and that the account number and mailing address is correct. The purpose it serves for us is that it helps us determine what information they do have or how they will respond.
Even though the collection letter might say that if you don’t dispute this within thirty days it will be considered valid, the Fair Debt Collection Practices Act specifically states the opposite. It states that if you don’t respond within the thirty days of receiving their letter, it will not be considered an admission of the debt.