Don’t Take Debts Lying Down: Demand Validation

Millions of Americans find black marks on their credit reports each year. Many of those are completely false. Some are not even their debts at all. Others reflect actual accounts but the amounts are wrong or have already been paid. Many people just accept this as part of life, assuming it is too difficult to fight against these negative items.

However, a little effort can go a long way. You can fight false collections and inaccurate items reported on your credit before you determine that bankruptcy is the right step for you. The first step is making the creditor prove you owe a debt.

Debt Validation

When a debt is sold to a third party collector, that collector is then entitled to attempt to get you to pay. However, when the debt is inaccurate or false altogether, the consumer has a right to demand proof that the collector has a right to collect it. This process is known as “validation.” According to the Federal Trade Commission (FTC), debt collectors must notify the consumer that they are attempting to collect a debt, and the consumer has 30 days to dispute the debt. Under 15 U.S.C. 1692g, section 809, the Fair Debt Collection Practices Act makes it clear that upon receiving such a letter disputing the debt, the creditor must cease all collection activities until it can validate the debt. This also means the creditor cannot report the debt until it can validate such a debt.

When Debt Collectors Violate the Law

One would think collection companies would adhere to the law strictly to avoid trouble, but actually, the truth is just the opposite. It is hard to know whether violations are willful or due to lack of training and accountability, but one thing is certain – collectors often break the law. The FTC estimates that around 5 million people are affected by predatory or illegal collection practices every year. But there is good news: if a collector violates any provision of the Fair Debt Collection Practices Act, a consumer may be able to sue for damages and receive up to $1,000 for each violation, plus lawyer’s fees.

What to Do

If you receive a notice of collections stating that you owe money that you do not agree with, send a letter demanding that the collector cease collections and validate the debt. Send it certified mail with return receipt requested. If the collector cannot validate the debt, it should not be reported nor should they continue attempting to collect it.

You have the right to dispute the debt on your actual credit report, so anyone requesting your credit will see that the matter is disputed. For example, if you former spouse was obligated to pay that debt in the divorce, you may note your file to that effect.

If debt collectors violate these rules, you may be entitled to damages. Sometimes bankruptcy is necessary; however, if inaccurate debts are causing you to worry, discuss it with your lawyer to learn more about your options.

If you need assistance with validating a debt in the Orlando area, or you are considering bankruptcy, don’t hesitate to contact Goodblatt · Leo for help. Our staff can help ensure you understand your rights and responsibilities throughout each step of the process.