A Guide To Debt Validation Letters

If you’ve received a debt validation letter, you’re probably wondering whether it’s real, and what it means for your debts. You may have limited time to assess the situation and make the right moves to protect your credit score and financial well-being.

Communication from collection agencies can be extremely stressful, but there are several state and federal laws in place to protect you from unruly practices and harassment. If you know your rights, you will be able to protect yourself and begin the process of retaining or rebuilding your financial well-being.

The first step to protecting yourself is knowing what to do when you receive a debt validation letter. Can you just ignore it? Is there a way to escape being hounded by creditors? What is the first action you should take after receiving the letter? We answer all of those questions and more below!

What Is A Debt Validation Letter?

A debt validation letter is a letter that debt collectors use to prove you owe them money. The letter will include the details of your debt, how much you owe, when you must pay it back and what you can do to dispute the debt.

What The Letter Needs To Include

If you receive a debt validation letter, you should look for the following:

• The name of the creditor: Knowing the name of the creditor to which you owe money is important because there is a good chance it is not the same organization from which you borrowed the money. Creditors and collection agencies often buy and sell debts among each other, so it is important to recognize which company you are dealing with.
• The amount you owe: The total amount of money you owe the creditor at the time the notice is sent
• A description of the debt: A breakdown of the total amount you owe broken into an itemized list that may include interest, fees, prior payments or credits since a certain date
• Reply information: Contact information for the creditor where you can reach out if you believe the debt is not yours or if the amount is wrong.
• 30-day end date: The specific date representing the final day of the 30-day period during which you can dispute the debt.

When Is A Debt Validation Letter Required?

It is critical to know that debt collection agencies are not automatically required to send you a debt validation letter. According to federal law, the creditor could tell you all the required information orally when they first contact you about the debt. However, if they do not provide all of the necessary information during their initial contact, they are required to send you a debt validation letter within 5 days of their initial communication. If a debt collection agency attempts to provide the information over the phone during their initial communication, you can request that they send the information in writing. Then they will still be required to send a validation of the debt letter within 5 days. The letter may be sent by mail or electronically.

If your creditor does not send you a debt validation letter, they could be in violation of the Fair Debt Collection Practices Act (FDCPA). If you believe your creditor has violated the FDCPA, you can file a complaint with the Federal Trade Commission or the Consumer Financial Protection Agency (CFPB).

Next Steps After Receiving A Debt Validation Letter

Once you get a debt validation letter in your mail or inbox, don’t panic, follow these steps:

Read Through The Letter

Debt validation letters are not the usual spam letters that you can throw in the trash without reading them. Since you only have a 30-day timeline to dispute the debt if it is not correct, it's essential to read the letter carefully to determine if all of the information is correct.

When reading through the letter, you should first make sure that all of the information the creditor is required to give you is available. There may be other information in the letter, but the details mentioned above are required. One of the most important details to check is your name, address, phone number and any other personal information in the letter. If any of this information is incorrect, it may be a sign that the letter was sent to you in error.

Check For Errors

There are a host of errors that may cause you to request more information about the debt or dispute it. One key detail is the name of the creditor requesting payment. Not recognizing the name of the creditor is not automatically a sign that there is an error. As mentioned above, your original creditor may have sold your debt to another creditor or collection agency. However, if you believe the organization contacting you is not your original creditor, you can request more information about the original creditor.

You should keep in mind that the debt may also be subject to a statute of limitations. These statutes are state laws that limit the amount of time that creditors are allowed to file a lawsuit to collect an unpaid debt. If you believe that the creditor is trying to collect a debt passed the timeframe set by a particular statute, that may be an error that you can dispute. Since the statutes change from state to state, the timelines can vary widely. If you are unsure about the statutes of limitations for debt in your state, it may be wise to consult a lawyer for more information.

Other possible errors may include the amount of money you owe or more specific details of the description of the debt. If you notice any possible errors within the letter, you must respond to the letter to request more information or dispute the debt.

Respond

You have several options for how to respond to a debt validation letter, including asking for more information from the creditor. We will cover that option in more depth below, but there are several other messages you could send. If you simply want the creditor to stop contacting you completely, you can communicate to them in writing to say so. Once you request that they no longer reach out to you, they can only respond in two ways: to tell you there will be no further contact or to tell you they may take alternative actions against you to recover the debt, such as filing a lawsuit against you. If they respond this way, you should take it seriously. Federal law forbids creditors from threatening actions that they cannot legally take or do not intend to take. So, if they threaten to sue you, you should be aware that is likely something you may have to deal with.

You can also respond to the creditor requesting that they only contact you through your lawyer. If you have a lawyer representing you to resolve your debt issues, then it is wise to have all communication with the creditors go through the lawyer so they can quickly advise you on what the next steps should be.

If you are comfortable with creditors contacting you but want to manage the methods they use to reach you, you can also respond with specific instructions on how they should contact you. If you are tired of creditors calling you and would only like to communicate with them through email, you have the right to tell them to only contact you through email.

The CFPB provides sample letters for each of the scenarios above and more.

Dispute Or Repay The Debt

Once you receive the debt validation letter and request as much information as possible about your debt, you have two remaining options. If you do indeed owe the creditor the money they claim you do, you must repay the debt. If you do not repay the debt, the creditor could take a number of actions against you that could harm your financial situation for years to come. For example, they could file a lawsuit against you. If the court agrees that you owe the debt, they could issue a judgment against you forcing you to pay the debt. This judgment could allow your creditor to garnish your wages, take control of your bank accounts and seize other valuable assets in order to pay for the debts. This could destroy your credit score and hinder your ability to borrow money for many years. If you would like to avoid a situation like this, talk with your creditor to see what kind of options are available to pay off your debt in a manner that you can afford.

If you have reviewed all of the information and believe you do not owe the debt you are being contacted about, you can officially dispute the debt. Before you take this step, it is important to remember that disputing the debt does not automatically cancel the debt. However, once you dispute your debt, your creditor cannot contact you until they send you verification of the disputed debt.

The CFPB provides a formatted letter that you can send to a creditor to dispute a debt. The letter informs the creditor that you do not have a responsibility for the debt and instructs them to provide you with evidence for the debt. It also requests that the creditor stop contacting you and report to all credit agencies that the debt is disputed.

How To Request More Information With A Debt Verification Letter

If you are confused about why you’re being contacted about debt, there is a straightforward step you can take to get as much information as possible. By sending a debt verification letter to the creditor who contacted you, you can request all of the necessary information you need to determine whether you actually owe the creditor or not. It is important to note that this is different from a debt validation letter. A validation letter is sent by the creditor to you while a verification letter is sent by you to the creditor.

1. Submit Your Request In Writing

You should submit your request for more information about your debt as soon as possible after being contacted by a creditor or collection agency. It is important to remember to keep records of all of your written requests. If the creditor does not follow the law pertaining to your request, it is essential to have the written request in your files for evidence in case the issue is debated in court.

The mail or email address to which you can send the letter should be stated in the debt validation letter. You should address the letter to the creditor or collection agency that sent you the debt validation letter. Remember that this may be a different organization than your original creditor.

You should send your request for more information as soon as possible after receiving a debt verification letter.

2. Request Information About The Debt In Question

There are several questions that you need to ask you creditor when requesting more information about your debt:

• What is the type, age and amount of debt?
• Do you have a copy of the last billing statement by the original creditor?
• Have there been any additional fees added since the last billing statement from the original creditor?
• Have there been any payments or reductions to the debt since the last billing statement?
• What is the date that the debt became due?
• Is the debt within the statute of limitations to be collected?
• Why does the creditor think they’re owed money?
• Can you provide a written agreement that created the original requirement to pay?
• What is the creditor’s authority to collect the debt?
• If this debt originated with a different creditor, can you provide evidence that you are the rightful creditor?

The goal of these questions is to receive as much information about the debt as possible. However, while there are certain pieces of information that are legally required, requesting more information about the debt does not mean the creditor is legally obligated to give it to you. If your creditor is withholding information that you specifically asked for but are unsure whether this breaks the law, you may want to contact a lawyer for assistance.

3. Send The Letter

As we have mentioned previously it is essential to send your debt verification letter as soon as possible after receiving a debt validation letter. If you send it within the 30-day time period after receiving the debt validation letter, you can retain all of your legal rights to receive the necessary information about your debt.

Once you send a debt verification letter, the creditor must stop all attempts to contact you or collect the debt until they respond to you with verification for your debt. If they never respond and never contact you again about the debt, the matter may be settled. However, if they keep contacting you without providing verification of the debt, they may be violating the FDCPA.

What Happens If You Ignore The Debt Validation Letter?

While it may be hard to deal with debt collectors, ignoring a debt validation letter is never a good idea. There is a 30-day time period set by federal law during which you can request more information about the debt or officially dispute all or a portion of the debt. If you ignore the debt validation letter for so long that you miss the deadline to dispute the charges, you could lose the right to address any overcharging or errors committed by the debt collectors. If you ignore the debt long enough, it could have an extremely negative impact on your credit score.

The Bottom Line

Creditors will send you a debt validation letter to prove you owe them money. However, that letter may not tell you the whole story. You have several options for how to react to a debt validation letter, including sending them a debt verification letter in order to receive more information about the debt. If you believe you don’t owe the debt, you can also dispute it with the creditor. However you choose to respond, you should always respond to the debt validation letter within 30 days so you can retain all of your rights to the necessary information.

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