Debt Validation: Do You Really Have to Pay the Collection Agency?

Have you been contacted by a debt collection agency in regards to a old (charged-off or default) credit account? If you have, you’re probably wondering what your rights are under the law to fight the claim and make sure you’re not being taken advantage of.

After all, debt collectors can be relentless in their pursuit of unpaid balances and, in some cases, have been known to use intimidating (and confusing) tactics to get you to settle the debt even if the debt is not yours.

Under the Fair Debt Collection Practices Act, you’re afforded several provisions to help ensure the debt is being fairly collected and that you are legally responsible to pay the debt. One of the most important provisions under the FDCPA is the right of the consumer (or borrow) to request “validation” of the debt. In other words, you have the right to ask the collection agency to PROVE that the debt belongs to you.  The burden of proof is on the debt collection agency to prove you really owe the debt.

Unfortunately for the consumer, the standard for “proving” the debt is yours is actually very low but at a minimum must include the following:

  1. Proof that the collection agency “owns” the right to collect the debt.  This could be a contract between the collection agency and the original creditor (original lender).
  2. A statement from the original creditor detailing exactly what the amount owed is, along with any applicable payment history, and additional fees and interest.
  3. An original signed copy of the loan or credit agreement.

Requesting debt validation does a variety of things to protect you:

First, you want to make sure that the debt actually belongs to you and there wasn’t some kind of administrative mix-up or credit fraud activity going on.

Second, once you’ve sent the collection agency a letter requesting validation of a specific debt, the collection agency can no longer contact you regarding that particular debt until they provide you with reasonable evidence that they do in fact have a right to collect the debt from you. If the collection agency has been harassing you with phone calls or sending threatening letters, a debt validation request is a good technique to stop ALL correspondence from them until the authenticity of the debt has been validated.

Third, if the debt collection agency fails to validate the debt with sufficient evidence, they may not attempt to collect any money from you. The collection agency is not allowed to contact you any more regarding the debt unless they are able to validate the debt.

Sample Debt Validation Letter:

Click image to download sample debt validation letter in MS Word format.

Click image to download sample debt validation letter in MS Word format.

Click the image above to download an MS Word sample debt validation letter template that you can edit for your particular situation.  Remember to send the debt validation letter via certified mail “Return Receipt Requested”.  Sending the letter certified mail return receipt requested will allow you to prove you sent the letter to the collection agency in the event you decide to sue the collection agency (for example, if debt collector attempts to collect the debt from you before validating the debt after you’ve requested validation, you may be entitled to sue them for $1,000 for each infraction)!

For more information on your rights under the Fair Debt Collection Practices Act please visit the Federal Trade Commission’s Consumer Information Page.

Too Much Debt?  Download our free Trees Full of Money Debt Snowball Calculator and see how quickly you can pay off your debt.

Add Comment

sign up today for our
free personal finance newsletter

Subscribe to our mailing list and receive FREE daily updates from Trees Full of Money, the best personal finance blog nobody has heard of.