When to Request Debt Validation From a Debt Collector

The debt validation and verification topic is deserving of much more time than I am going to give it in this post. I am covering this briefly due to the question I received yesterday after publishing part of our charge off series. where one of the bullet items states:

Avoid some of the nut job advice on the internet about handling this stage of collection”

Requesting validation of debt is a consumers right under the Fair Debt Collection Practices Act (FDCPA). More specifically section 1692g of the Act.

Debt validation requests have absolute applicability in many circumstances. You have the right to ask that a debt be validated if you do not think you owe it, or the amount asserted as due and owing is in question. In fact, your right to dispute a debt and request it be validated is required to be spelled out to you in virtually every debt collection letter you may receive from a collection company. That makes it pretty damn important!

I do not disagree with those who point to the importance of it. I absolutely disagree with nut jobs on the internet who wax on and on about how you should always request validation NO MATTER WHAT!

Debt validation requests when you want to resolve a debt.

Don’t send debt validation letters to debt collectors when you are really just trying settle or pay. It can back fire. Let me be clear here; I am talking about a person who wants to RESOLVE a debt placed with a debt collection agency after charge off, and who knows they legitimately owe the debt.

When sending in a debt validation request in response to a dunning letter you receive from a debt collector, who is simply an assignee of your creditor, you may see your file get immediately kicked back to the creditor. Your creditor may then decide to escalate your account for more aggressive action such as placing the account with a debt collection law firm, which can then lead to you being sued in order to get you to pay credit card debt and other loans.

See, it backfires. Not all the time, but do you take that chance if all you want to do is get the debt behind you and move on with your life? Settling the debt while it is with the debt collection agency would allow you to put the matter to rest.

I should point out that requesting debt validation can be a useful tool when navigating tough financial times. For someone who cannot access the needed money, or commit to a payment plan due to limited resources, or who does not want to file bankruptcy, or needs to delay filing for some reason, debt validation has its place. Also, disputing a debt or requesting validation has great applicability when dealing with a debt buyer.

As an aside:

Consumer advocate organizations have been vocal about the need for the Fair Debt Collection laws to be updated. The FTC announced the need to update the law. The FTC effectively subpoenaed the largest debt buyers in the nation earlier this year. Collection laws and practices are being looked at in detail. This scrutiny will almost certainly result in changes to the 30 plus year old consumer protection law, bringing it current with the realities of today’s society and advances in technology. I will go out on a limb and suggest that changes to federal debt collection laws will lead to changes in how debts are assigned and what information gets passed on to a debt buyer. As a result, debt buyers will more readily be able to validate debts upon request.

Post any questions or concerns you have with debt validation in the comments below for feedback.

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  1. Nicki says

    I was sent about 10 letters today from various lawyers informing me that a lawsuit had been filed against me for a credit card debt from 2 years ago (one even attached the image of what was filed at the court house). I want to know what my next step is. I asked them to send me a signed copy of my agreement for services and they sent me a copy of a bill. Is that considered validation of a debt? Also the “validation” was not sent back within 30 days. I don’t hear anything else from the company after that. I don’t understand how they can file a lawsuit without providing a debt validation. With that said what are my options now? Since I haven’t been served yet can I still settle with the company? Thanks in advance!

    • Michael Bovee says

      Nicki – Debt validation is painfully simple for debt collectors to provide. There is a great deal of people that post to web sites with elaborate things debt collectors are supposed to respond to when validating a debt, but most of it is overly broad and courts have ruled otherwise. The 30 days for debt collectors to respond to validation is not largely required, but is also touted as some misleading date line in the sand.

      You can still settle with the company suing. But should you? Who is the named plaintiff in the suit? What amount are you being sued for?

      You can also pick up some tips for negotiating by reading this post (and the comments) about settling when sued.

      • Nicki says

        Thanks for your response. I’m being sued by cach llc. I haven’t been served so I’m not sure if the amount has changed due to them filling. When it was with the collection agency the total was for $3500. If I want to settle who would I contact? Would that prevent this from going on my credit report as a judgement? I read thearticle you provided, if i were to make a lump sum offer what percentage is reasonable? Also if I can’t meet their terms for a settlement will they generally consider a payment plan and if so is it usually for the full amount?
        If I choose not to what’s my best course of action? I live in Georgia and make the assumption my wages could be garnished. Could my husband also be garnished? Should I take my name off of our accounts and request my checks be mailed to me?

        • Michael Bovee says

          If you want to settle the debt you would contact the attorney for the debt collector. Settling with a debt collector who has sued will often mean a lump sum is required to put an end to this. Payment plans that extend more than several weeks could mean a stipulation, or consent to judgment, and you want to avoid that if possible. But not the end of your credit if you cannot.

          A realistic low settlement in this situation is 50% of the balance being sued for. But they feel they have leverage, and are right to think that way. The debt collector may not want to settle for that low, or at all. You sometimes have to give a reason to settle with you, which means not being like more than 90% of collection lawsuit targets, and raising a defense through the court process. Settlement percentages tend to, but not always, get more reasonable after you show you are willing to defend against the debt collector.

          Before I answer the last few questions in your above comment – Can you pool together about half of the money the collector is suing for? If so, how long will that take you?

            • Michael Bovee says

              In that case, you probably do not have to jump through hoops worrying about the debt collector garnishing, or freezing your bank account. You can use the tips outlined in that other post about settling when sued, and call the attorney collector to negotiate the deal. Be sure to get it all documented before you pay anything. Use the outline in this post as a guide for what to look for in a settlement agreement.

              You are being sued, so run your scenario by an attorney with a practice that focuses on helping consumers deal with debt collectors in Georgia. I sent you some contact info to follow up on for that.

              • Nicki says

                Thank you very much for your advice. Considering the validation they sent me initially was a bill would it be safe to assume they don’t have much leverage to prove this debt? Do these law firms have visibility into my salary and bank accounts etc.? Assuming they accept the settlement will the judgement go on file as dismissed or will there be no record of a judgement? When it comes to contacting a lawyer are you suggesting that i contact them for a consultation or am i more likely to settle for less with representation? If they aren’t willing to settle, what are my options?

                • Michael Bovee says

                  Nicki – The bill or statement that you got in response to your debt validation request is not the limit of what they have, or can get, in order to prove the debt. But it is true that some debt collectors and debt buyers have had a difficult time of this.

                  Debt collection firms have visibility in to your credit reports, and some other public data. The credit report is pretty revealing, showing where you work/last worked. A salary or wage is may not be listed, but it is something that can be estimated in a blink. The collector would not have ready visibility into your bank account.

                  If you were to settle this with a lump sum prior to any judgment ruling from the court, you would be doing that to avoid a judgment in the court record, so no reporting.

                  Contacting an attorney with experience helping consumer with late stage debt collection like this is part of becoming informed of all options. You do not have to retain one to defend the suit, or to help you file an answer, but doing so may lead to a better settlement outcome, or winning the case (getting it dismissed).

                  They are willing to settle. If they don’t, it is, at least in my opinion, because you look highly collectable on paper, or you went about it all wrong. At the end of the day, if the debt collector is not negotiable, you have to determine whether you want to pay up, or fight to the end. Either way, you are making a commitment of time and money.

        • Amy says

          You need to be careful. You were not served and some debt collectors mail forms that look like they are legal. That is an illegal practice but it is done. Confirm with a court house, not the company.

  2. Nicki says

    I’ve been busy since we last spoke! I contacted an attorney who advised me just to contact the creditor on my behalf was $785. I politely declined and called the law firm myself. I let the agent know that I wanted to settle for $1400 (I low balled it). His response was that he would settle for roughly $2400. He wanted $1400 upfront and 3 months of $350. I told him I couldn’t afford it and didn’t want to commit. My fear is not being able to afford the $350 and ending up back at square one. I asked if I were able to borrow money what’s the absolute least he can settle today. He stuck to his guns with the $2400. Like everyone else is love to avoid a BK however I’m wondering if that’s my best option now since I could include other credit cards and medical bills for a lump sum. Would You suggest I accept the offer and find a way to borrow the money or go the BK route?

    Thanking you in advance,

  3. Nicki says

    Also I didn’t bring up bankruptcy to the agent do you think that will change his offer any? I definitely can’t afford for my wages to be garnished. So BK is my only option outside of reaching a settlement I can afford.

    • Michael Bovee says

      Nicki – If you are only considering bankruptcy because of this debt, it is not worth it. National average cost for BK (all costs) is about 1800. Assume yours would cost 1500. You are only 900 away from meeting the current offer, so would be filing bankruptcy over 900 dollars at that point.

      Before filing bankruptcy, and if it were me in your situation, I may talk to a naca attorney with debt collection defense experience about fight this all the way through the court process. But I may also go back and offer 2k if I could pull that together in the next week or 3.

  4. Aliya says

    I was just contacted by a debt recovery company and agreed to an arrangement for a repossesion that tool place in 2007, although they said the last payment I made was in 2008. I honestly dont have the money…if I default that agreement couldnt I just wait til next year when it will be 7 years and get it off my credit.

        • Michael Bovee says

          I would encourage you to talk with an experienced consumer attorney with insight into how the courts have ruled about resetting the SOL to legitimately sue you for a debt when you verbally agree to make payments, then don’t.

          You can expect the repo to drop from your credit report on schedule though, as none of the paying, not paying, saying you will pay… will apply to the SOL for credit reporting.

          Eastern or western PA? I can send you an email with contact info to an attorney who knows the answers to all of that, and who offers no cost initial consults.

            • Michael Bovee says

              SOL stands for statute of limitations. It governs time limits for how long you can be sued legitimately for a debt. Each state sets their own SOL for collecting different types of debts in the court. There are also laws that govern how a person might reset the SOL once it has expired. Pennsylvania is not clear enough for me to tell you point blank what that is, but the attorney I am emailing you contact information for can. And once you talk to him about how all of this went down, he may have other suggestions for you.

  5. Kim says

    Hi Michael,

    I sent a request for verification to Portfolio Recovery Associates. The response that I received just shows that they purchased an account in my name from Capital One and the amount owed, however it does not show a break down of charges. Does this count as verification of debt from a legal perspective?

    • Michael Bovee says

      I moved your comment to this page that focuses more on debt validation requests. PRA can trip over the very low threshold required to meet the obligation for debt validation. There are only a couple of states that require more than what they sent you. Massachusetts and California are good examples.

      Why did you expect them to break down all of the charges?

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