Imagine you have a delinquent loan from a credit card company and it has been forwarded to the collection agency and you get a letter or a call mentioning a certain amount that needs to be paid which is a higher amount than you owe to them, or you don't owe them a single penny. You freak out as to what should be your next step or how should you counter that. Of course, you don't want to pay a debt that isn't yours. Right? That's when the debt verification letter comes into place. Let's understand the process behind this letter and how it can help you.
If you owe some loan to your creditor and that loan has been transferred to a third party which is called a collection agency who takes the responsibility of collection of that debt from you. As the 1st step in the collection process, they call and tell the customer about the debts and relevant information which also needs to be sent in writing by a debt collector who has the person responsible for collecting the debt within 5 days of contacting you. But this process has been complicated and confusing for the customers, where they are being contacted by debt debt collectors to pay loans they don't owe to them.
As per an annual report of the federal trade commission, 49% percent had filed complaints related to attempts to collect debts that customers never owed. The issues included an attempt to collect debts that were not there's, or debt that they do event recognize, an attempt to collect debt for the products or services that they never received in the first place. Further, a whopping 72% percent of customers have registered complaints that enough information is not given in the credit report which made it difficult to find out about the debt following which most of the people were threatened to pay the debt failing which their credit history would be damaged.
To help you with these unauthorized attempts, a debt verification letter is used. Simply put, this is a letter that a customer can send to the debt collector for debt verification, if they believe that they owe less or no debt for which they have received a debt letter. For a basic understanding, it is a letter that is sent by the debt collector mentioning the following:
Along with that, as per the fair debt collection practices act(FDCPA) latest updates the debt collection of debt notice needs to give disclosure and other information which includes details that indicate which debt is being collected, details about consumer protections, consumer rights under the fair debt collection practices act, and the disclosures required under certain laws.
And to dispute this you have to send this letter of debt verification within 30 days, failing which the debt will be deemed as valid. However, please note that failing to send a verification letter within the time limit, will not refrain you from disputing the debt further. Sending the letter will help you as the debt collector has to stop all debt collection practices until they reply to the verification letter.
A validation letter is a letter that can be used in the following two ways:
So, validation can be sent by both the parties,
It is important to note here that, in any case, the debt collector has to reply within 30 days, if they don't then as per the fair debt collection practices act, the debt collector will be liable to such customer for any damages sustained by them or may be liable for other such damages which don't exceed $1000.
Coming to the difference, the debt validation letter talks about the debt, the creditor, the rights of the customer whereas the verification letter is primarily used for disputing the debt mentioned in the debt validation letter.
When you receive a debt validation letter, the next step that you as a customer should take is to send a debt verification letter. Writing the verification letter can be a tedious task while you are worried about the upcoming compilation and issues. So, here are the points that you need to mention in your verification letter along with the sample.
Debt verification letter very simple to write: you need to mention that you don't recognize this claim under which law you've exercised your right right, i.e. the fair debt collection practices act and ask for the following information from the debt collector:
Debt collector name
I am writing regarding the debt validation notice that I've received from your collection agency on [Date] via [Letter/E-mail]. As per the said notice I owe [Amount] to [Creditor name]. However, I deny this claim and through this notice, I dispute whatever information was stated in the Validation notice.
Since I don't acknowledge the debts mentioned, it is my responsibility to verify the information reported to the credit bureaus is accurate. Hence, if you have relevant evidence and data that the debt is payable by me, then I hereby request you to please send the following information to me.
Till then, kindly cease all communication with me and suspend all collection practices failing which i will file a lawsuit against you. I deny responsibility for this debt and request you to please inform the credit bureaus if necessary.
Note: Do not mention a lot of things in the validation letter, as it might cause problems for you or it might look like you owe the date. Keep it simple and short.
Also if you want to see how a sample debt validation letter looks like, you can access it here.
Debt collection provides an opportunity for creditors and the debt collection agency to legally collect payment from the customers for the unpaid debt. While the importance of debt collection cannot be emphasized enough, there are a lot of scams and issues that have been observed by the respective authorities. So, to keep a check on the actions of debt collectors and the rights and powers of the customers. Hence, the fair debt collection practices act, which came into force in March 1978 governs the debt collection practices.
Fair debt collection practices act restricts the act of debt collectors and protects customers in the process of collection of debt.
Getting a debt validation letter is not a big deal in today's time, even if you miss out on a small billing, still you will be getting the validation letter, but its important to keep note of the following things to avoid unnecessary payments to the .
These were the bunch of options that you can have as a customer, you can compare them and decide the best option for yourself!
The process of Debt verification letters and debt validation letters can be a complex task in itself, but they can be tacked easily if plan it properly. Seeing the rising number of complaints of fraud and mistakes that are done by debt collectors, makes it important to check and verify the information before taking any steps. Despite having a debt, there is still a chance that you may not have to pay it because debt collectors do not have proof of their claims!