Use Debt Validation to Repair Your Credit!

If you have ever dealt with a collection agency, you know what an unpleasant experience this can be. They can be rude, insulting and very often don’t play by the rules.

Fortunately, the Fair Debt Collection Practices Act governs their actions, and provides some great consumer protections.

Among these, is your right to debt validation.

When a lender is not able to secure payment from you, they have several options. Two of the most common are to hire a collection agency or to sell the debt to a collection agency for pennies on the dollar.

If the lender chooses to hire a collection agency, they will assign the debt to them. This is significant, because unless your contract says "or its assigns", the collection agency does not own the debt and you do not technically owe them any money.

Regardless of whether they own the debt or not, you are still entitled to validate your debt.

When you request debt validation, the burden falls on the collector to prove to you that they own or have been assigned the debt. They can do this by showing you an original signed loan agreement or loan application. They can also provide or a complete payment history or account statements. A simple print out from their system doesn’t work-they must PROVE to you that you owe them this debt. (You may need to be persistent, because many collection agencies will try to bully you into accepting something that does not really validated the debt.)

If they are not able to verify that you owe them money, then they are not allowed to report this debt to your credit bureau. They also can not contact you or make any other attempts to collect the debt. If they do, they are in violation of the Fair Debt Collection Practices Act, and you can sue them for $1,000 + per instance.

If you have a debt you would like to have validated, you must first dispute the trade line with the credit bureaus. If this does not result in a satisfactory response, (which it likely won’t) then you will want to send a request for validation to the collector via certified mail.

In your letter, request that they provide you with verification that you owe them this debt (including their agreement with the original creditor), your original contract, and how they are calculating what they claim you owe. It is also a good idea to request proof that they are licensed to collect in your state. Many collection agencies will attempt to operate in states that they are not properly licensed in.

If, after 30 days from their receipt of this letter, they have not provided you with proof they own this debt and they are still reporting to your credit bureau, you will want to send them another letter. In this letter, include a copy of your prior letter, along with proof that it was mailed. Let them know that they are in violation of the Fair Debt Collection Practices Act.

After another month goes by, if they have not either provided you with statements from the original creditor or a copy of your loan application and they are still verifying the debt with the credit bureaus, you may need to sue them.

Prior to doing this, you will want to contact all three credit bureaus. Let them know that the collection agency has failed to respond to a request for validation and request that each of the three credit bureaus provide you with the method that they are using to verify the debt.

If the credit bureaus are not able to provide you with a satisfactory method as to how they have verified your debt and they continue to report to your credit bureau, you may have a case against them as well.

For more information on credit restoration please visit CreditRepairCollege.com.