You get a call from a debt collection agency. Your first, panicked thought is, “I don’t owe anything!” And then massive anxiety kicks in. “How do I know if this call is real and not a scam?
There is a way to find out for sure: send the collection agency a debt validation letter.
Here’s how sending a debt validation letter can help you deal with collectors and receive proof of your debt.
Why do you need to send a debt validation letter?
After a debt collector contacts you for the first time, they must send you a validation notice with the amount you owe within five days of the initial contact.
Under the Fair Debt Collection Practices Act (FDCPA), borrowers have the right to request proof of their debt from collectors. If you receive a validation notice from a debt collection agency and have doubts, you can send them a debt validation letter.
If the collection agency can’t provide proof of the debt, they can’t collect on the debt.
It’s important to note that you need to send the letter within 30 days of receiving the validation notice from the collector.
Once you’ve sent the letter to the collection agency, the collecter must then adhere to the guidelines set by the Federal Trade Commission (FTC) and stop contacting you. The collection agency can only resume contact if they can send you written verification of your debt.
When you shouldn’t send a letter
If you receive a validation notice from a collection agency and you know that you owe the debt, don’t send a letter to try and get out of it. It will just single you out among the many other people the agency is trying to collect from.
However, if you know you owe the debt but you’re not sure the collection agency is the one that owns it, you can check your free annual credit report at AnnualCreditReport.com for verification.
How to write a debt validation letter
The next step is how to write a validation of debt letter – and time is of the essence.
You should send your letter via certified mail within the first 30 days of contact with the debt collector.
Here are the details you want to ask for, as taken from this sample debt validation letter from the Consumer Finance Protection Bureau (CFPB):
- Why you owe, including the name and address of the creditor to which it’s owed, the account number, the amount, and the name of the original creditor (if different from the one contacting you).
- How old the debt is, any additional fees or interest charges that may have developed, any changes from the last statement by the original creditor, the last payment date, etc.
- Proof of the collector’s license in your state or their state of operation.
Even though you’re required to send your debt validation letter within the first 30 days of being contacted by a creditor, there’s no time limit within which they have to respond. They simply can’t contact you to try and collect that debt from you until they respond to your letter. It’s up to you to maintain contact and make sure you get proof of your debt.
It’s important to be proactive; if you do owe that debt, it will still show up as past due on your credit report and damage your score. It’s in your best interest to get the validation letter and set up a payment plan as quickly as possible.
When to dispute a debt
If you know for a fact the information given to you by the collection agency in their validation notice is incorrect, you can dispute the debt. There are a few reasons you might want to dispute the debt, including:
- You don’t owe the debt.
- The amount you owe is incorrect.
- Your debt has expired due to the statute of limitations on debt.
If you’re in a position to dispute your debt, then you’ll need to send a letter in a similar manner to a debt validation letter. The CFPB offers a few more samples to help, including one explicitly stating you don’t owe the debt.
Finally, whether you’re sending a debt validation letter or a letter disputing the debt, make sure you date them and keep copies for yourself. That will protect your rights under the FDCPA by showing you followed the correct protocol.
One of many best practices when dealing with debt collectors
There are a few best practices for dealing with debt collectors, and sending a debt validation letter is one of them. One thing is for sure: when you get a call from debt collectors, do your homework before you take action.
Look into whether or not the debt collector is a real company, whether the debt is something you owe, and whether or not this is the company that currently owns the debt.
It’s hard enough to repay debt. Make it a little easier on yourself by taking the time to ensure you’re not sending your money somewhere it doesn’t belong.
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|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
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All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
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Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
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