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.
Michael, I have a question related to debt validation. I have received several emails from a company called Resurgent Capital Services, on behalf of their client (LVNV), who apparently acquired a charged-off credit card account from US Bank back in Sept, 2021. I did have a US Bank credit card account that I did unfortunately need to stop making payments on back in 2018 when we were in a difficult financial situation. I have not yet contacted Resurgent, because at first I thought the emails were a scam. Apparently they are not, since they keep coming. However, the emails refer to an account number ending in 5383. I have never had an account with any creditor where those four digits were part of the account number. Is this a legitimate reason to request debt validation? If so, is there a format (or a template somewhere) that I can tailor to make the request in a legal way that protects my rights? Thanks!
Confusion about whether LVNV is collecting on the right account is a good reason to request debt validation.
I like using the CFPB debt validation letter off of their site.
Thanks!
I have credit card debt with chase bank. Its three credit cards that have not been paid fr more than 6 months and it looks like they have gone to colections with MRS. Two of them for about 5k and oe for abut 9 k. I have received letter by mail from MRS giving me different options to settle. My credit report does not show them or any collections. Its shows as charged off acount under chase name. I want to try to tresolve it but also want to know if I settle with MRS can they remove the charge off or how thwy are going to report the debt (how its going to appear and aafect my credit score). Would it be better (if possible) to try to settle with Chase direcly so they can remove the charge?
You have no shot of Chase doing anything other than updating to show you have a zero balance paid collection. Nothing you say to MRS will change that either.
It’s typically no problem to bounce back and accomplish any credit and financing goal with paid collections on your credit. It just takes a little time.
Thank you for the answer. Should i pay in full or just settle for less? If they ar enot going to remov ethe charge off, what would be the affect of settling for less vs. pay in full?
Check out this video: https://youtu.be/Q7nwb8PvzPk
I just received a call from a private number, and usually I dont answer them. Though this one I answered because I was curious. They said that they were going to summons me in court for the unpaid balance of $12,464.36. Now this account was closed in 2006 but they said it was reopened in 2015. They offered me a few payment plans. Though, there are so many scams going around, I dont know what to believe. Im financially strapped right now and Im on disability.This was a long time ago.
Hi Michael,
I am in the process of settling a large amount of debt with several creditors; and, thanks to you, your website and YouTube videos, I am making good progress. I just got a letter notifying me that one of my accounts is now with Alpha Recovery Corp on behave of First Portfolio Ventures I, LLC. It lists my original creditor as Barclays Bank Delaware (which was the original creditor). However, this Barclays account was sold to Mercury (Issued by First Bank & Trust, Brookings SD) almost a year ago; and, is listed on my credit report as “Mercury/FB&T.” Should I ask for a validation of this debt? Should I try to negotiate a settlement even though the letter has no information regarding the Mercury/First Bank & Trust, to whom I actually owed when this account was charged off? The balance is $7,400.00, which is the correct amount for the Mercury account. I am afraid that if I pay to settle, the payment will not clear the debt to whom I actually owed, Mercury/FB&T. Thank you for all you do!
I would request validation in this situation if it were me.
Just received a letter from 3rd party, my debt was initially with Bank of America. I have 30 days to request validation. There is a box on the letter stating If unable to pay balance in full, contact our office for payment options which may be available to you. I paid on time until I was laid off. My spouse has a incurable cancer and have lots of medical bill. I don’t want a judgment, but not sure what to do. Call and see what the payment options are, consult a debt counseling agency. Also should I request validation letter, amount owed seems high.
Who is the collection from? What is the balance owed today? When did you stop paying BofA? What state are you in? Is your primary goal to resolve the debt through payments or settle if the deal is good enough?
What state are you in? It helps when I know the SOL to sue legitimately has passed.
I’m a post-grad student who was reliant on student loans to stay afloat, but they also paid my bills. Credit cards I had provided income for the necessities of my unpaid internships.
During this time, I had two major losses of immediate family members, my father and grandmother. Following their deaths, my grief literally put me into my current predicament. My struggle with depression caused by the grief set me onto the path that these credit cards weren’t getting paid.
I believe I have 4 debts I’m WANTING to resolve. I was temporarily employed but my depression really interfered with my functioning, and I was not in a state of mind that kept me successful. I needed to grieve. I have medical verification if needed, to verify the impairment.
Now, rising above it all… I’m pissed at my self and want to resolve these matters. I’m confused on how I should approach this, within my rights. I do not have the resources at this time to fully pay off each debt but I want to make a plan.
What should those steps be… I’ve read up on my rights re: how aggressive it can get. I’ve received a lot of phone calls.
My next intuitive actions I will take will consist of:
1. Review each debt online, via statement and understand how much I owe per credit card;
Next, should I…
2. Call the collections agency or the credit card company?
3. Attempt to see if I can resolve the debts with each creditor?
4. Or, call the collection agency to request a letter/document with the debt information?
And, lastly,
5. What about the fees they throw on to the debt I’m being collected, for?
I want to learn this hard lesson now and never fall back to this ever again. My anxiety is high and it feels scary but I need to make and take the actions steps… but, in the right way & ensuring I am not being blind-sided.
I appreciate the help tremendously.
Sincerely, Gina
Also, I live in California.
It would help me offer the feedback you are looking for if you post a reply with:
The name of the original creditor.
The balance owed.
When you last paid each account.
If you can tie an account to a recent communication from a debt collector, tell me who is collecting on which account.
I received a Verification of Debt letter with documentation that it was in fact my debt. However, I never requested the verification. The letter the collection agency sent said something to the effect of: “Here is verification of debt that you requested from us…”
I am about 3 months from the SOL running out. Are they trying to get me to acknowledge the debt as a trick to reset the SOL?
I doubt it. What state are you in? Who is the debt collector?
I am in Florida. The original debt holder was with Bank of America. The current debt holder is the Portfolio Recovery Associates.
Do you think they are possibly just getting ready to file suit and trying to show upfront that it is mine?
It could be that they are getting ready to file suit. It could also be that you requested validation at some point over the years, or that something you said on the phone, or sent, was interpreted as a validation request or dispute. Debt collection is changing dramatically right now, and part of that is for records to carry from original creditor to every collector that touches an account.
I would be on my toes about anything involving PRA.
Michael, I would like your opinion. I was going over some bills for my sister who is 85 years old and suffering from Dementia and has a 24 hour aide assisting her. I came across a a piece of mail from a debt collector dated a year ago that she couldn’t understand so just ignored it. It was a claim in the amount of $11,000 from Bank of America. Apparently, she had a checking account with them and then decided to change her banking to Peoples Bank. Because she “forgot” to close her account at Bank of America which had a very small amount in it, they continued to add bank charges which amounted to that outrageous amount! She can’t remember ever getting statements or mail from them and doesn’t remember how long ago she make that change. She has had no other income for years except social security and does not own any property or even a car. She lives in a government subsidized apartment and is on Medicare/Medicaid. I am worried about the possibly at some point of being harassed by that debt collector and causing her to be emotionally affected by that. Can banks actually keep charging you when you have had no activity over many years?
Fees can add up if they were agree to in the original contract.
I want you to help her pull a copy of her credit reports. Post an update about whether BofA is reporting this, or anyone else showing for a collection account.
I got a secured loan for a 2004 Chevy Cavalier through GMAC in 2007 for around $11,000-12,000(don’t remember exactly how much) and stopped making payments in 2010. My loan was turned over to Ally then Tate & Kirklin Assoc. and back to Ally. I received several settlement offers through the years, the last sent in January 2015 from Ally with an offer of $1,485.50, stating my balance was $5,941.98. I have not received an offer since then and learned it has been sent to Northstar Location Services. I would like to negotiate a settlement with them but don’t know what steps to take. I have the car which has been parked for years with some significant weather damage dropping the value to $1,463, according to an online assessment through edmunds.com. I spoke to someone from Northstar briefly who said that they can only offer $2000. I don’t want to call back to negotiate until I feel prepared. They are all based in other states (GMAC in Virginia, Ally in Michigan and Northstar in New York) and I am in Oregon. I don’t see how they can’t go below $2000 if the last offer I got was $1,485.50. Doesn’t the value decrease over time? I don’t want to settle for more than their last offer. What steps should I take when I do call Northstar to negotiate a settlement? Since I did make the initial call, should I still request for a letter of validation? I’ve read that it can be both a good thing or bad thing, How can I negotiate a low settlement?
The current value of the car does not necessarily play into your negotiations. The full balance owed on the loan is what they are working off of.
Each time a new debt collector gets the account you generally have to start anew with any debt validation or debt negotiation (at least currently, and with the circumstances you shared). It is not surprising Northstar is not immediately willing to accept less than 2k. But they may if you negotiate well, or as time passes and they get closer to when they too will lose the account.
I do not see much of a point to your debt validation request being made with Northstar. Your goal is to negotiate a lower settlement so you can get title to the car. You are only several hundred dollars from getting where you want to be. You could bring up the fact that the prior offer was out of reach then, and still is now, but you have someone willing to lend you $1,500, but that is all you can do. If you do not hit the mark this month, try again next month starting on about the 20th.
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?
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?
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.
What state do you live in?
Pa
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.
Philadelphia, PA. What is SOL?
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.
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.
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.
Michael,
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,
Nicki
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!
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.
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?
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?
Yes. I would be willing to offer 50%. Immediately.
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.
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?
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.
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.
Past credit card debt with Chase then went to American Acceptance now sent to Blatt, Hasenmiller, Leibsker & Moore. I sent a letter requesting proof of debt. They sent copy of summons from 2010 which I don’t remember. Can I demand more proof don’t even know how far back this goes.
Can I demand more proof of debt?
The threshold fro debt validation is low enough to trip over. Your proofs, now that there is a judgment, are in the court record. The way to expand on that is to try to open the case up to vacate it. How much is the judgment for? What state are you in?