The role of the debt collection agency
If credit card companies or other creditors inform you that you owe them money that you don’t think you owe, don’t hesitate to confront them. The reason: Those creditors will likely sell your debt to a collection agency. The collection agency’s sole means of making money is retrieving what the creditor now feels you owe to it. Collection agencies are, for lack of a better word, aggressive.
Video: What you can do to fight back against debt collectors
Worrisome tactics
Creditors set up these arrangements with debt collection agencies because they don't have the time or manpower to hunt down overdue accounts themselves. The collection agencies, however, have developed efficient systems for doing just this. It is in their best interest to try everything they legally can to coerce debtors to pay up. Just know, there are many things debt collectors are prohibited by law from doing. Some of their legal tactics go beyond irritating and harassing, know that you can fight back.
Video: How to stop debt collectors from making harassing phone calls
Your federal rights
Don't believe you truly owe a debt? You have the right to force the debt collector to either prove you do owe it or stop bothering you. One way to do this is to request a validation of debt from the agency by using what’s called a debt verification letter. Debt verification, or validation, is a federal right that has been granted to you under the Fair Debt Collection Practices Act (FDCPA).
The debt verification letter
In this debt verification letter, you ask (more accurately, demand) that the collection agency prove the debt is really yours. You can request from them all the details of the debt, then if the collection agency can't or won’t respond to you with verification of the debt, it must:
- Immediately stop trying to collect the debt. (This includes phone calls and letters.)
- Refrain from reporting the debt to credit bureaus. (This would be a violation of the Fair Credit Reporting Act and would allow you to sue for damages.)
Be sure to send your letter by certified mail, which will provide proof that it was delivered and received.
Threatening court action
The collection agency might respond to your validation request by issuing a summons for you to appear in court. However, legal precedent says that a collection agency cannot sue you if it hasn’t validated the debt. If the debt collection agency does not respond at all, contact the credit bureaus involved and tell them that the agency did not verify the debt under the FDCPA. It is a must to contact the credit bureaus before you consider filing a lawsuit against the collection agency. If you can prove the debt collector has violated your rights under the FDCPA, you can sue in federal or state court for up to $1,000, including damages.
Sample debt verification letter
[Date]
[Your Name]
[Your address]
[Debt Collector's Name]
[Debt Collector's Address]
To Whom It May Concern:
This letter is in response to [number of] entries made by your company to my credit report. I am disputing its validity. According to the Fair Debt Collection Practices Act, I demand an immediate validation of this debt. I further demand that your agency provide me with the following information:
Explanation of why you believe I owe this money.- Details of how you calculated the amount of the alleged debt.
- Proof that I agreed to pay what you say I owe.
- The identity of the original creditor from whom you say I made the purchase.
- Proof that the statute of limitations has not expired.
- Proof that you are licensed to collect this alleged debt in my state.
- Your Debt Collection Rights License number.
- Proof that you are authorized to collect this alleged debt on behalf of the original creditor.
- Complete transaction and payment history from the original creditor.
- The original amount of this alleged debt when it was assigned to your agency.
- Fees and interest charges that you have added to the original amount of the alleged debt.
- How you determined these added fees.
- A copy of my original signed loan or credit card application with the original creditor.
If your company has made false or misleading entries to my credit report, I will view it as fraud or harassment because it violates my rights under the following:
- Fair Credit Reporting Act
- Fair Debt Collection Practices Act
- Defamation of Character
After such time as you send me the requested verification, I will need at least 30 days to review it fully. I demand that all your collection efforts cease during this period. All communication with me must be conveyed in writing and delivered by certified mail.
If your office does not comply with my requests within 30 days of your receipt of this letter, I will demand that all references to this alleged debt be deleted from my credit report and that proof of those deletions be sent to me immediately.
Sincerely,
[Your Signature]
[Your Printed Name]
Changes to make in the letter
Of course you may want to add to or delete from this letter template anything you feel you should. If you have received correspondence from the collection agency, refer to it by date received and/or enclose a copy. If you have corresponded with anyone else relevant to your dispute, enclose copies of those letters as well. If you have an account number with the collection agency, refer to it at the top of your letter.