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Debt is serious business. Not only should you take your debts seriously for moral and practical reasons, but it’s important to know that there’s an entire industry that revolves around managing, validating and collecting on people’s debts. If you default on what you owe, rest assured that someone will come knocking.
However, it sometimes happens that debt collectors are chasing the wrong people, whether due to identity theft or mistakes in record keeping. That’s why one of the mainstay documents in the world of debt collection is the debt validation letter, which serves as an essential bulwark against errors and fraud in debt collection.
What is a debt validation letter?
Borrowers who have defaulted on debts should keep an eye on the mailbox. Once a debt collector contacts you for the first time — usually via a phone call — they have five days by law to send you a debt validation letter. Sometimes this letter serves as the first communication from the collector. Its purpose is to make sure that the debt in question actually belongs to you.
The rules governing these letters are laid out in the Fair Debt Collection Practices Act (FDCPA), a federal law that defines the limitations on third-party debt collectors who are tasked with collecting debts on behalf of others. The act’s provisions on handling defaulted debt stipulate that debt collectors can’t use “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” This means that they must have validation to support their requests for payment from a particular person. A debt validation letter is often called a “G notice” by those in the industry because the rules for it are laid out in section G of the FDCPA.
The rules are meant to protect consumers from errors caused by mistaken identity and identity theft. While identity theft is the more attention-catching issue, many errors also arise from mix-ups among people with common names — a particular problem with family names from certain cultural groups — and particular naming conventions, such as fathers and sons with Jr. and Sr. suffixes. Mistakes also occasionally occur in the amounts being collected and in record keeping indicating whether or not the debt has already been paid.
The debt valuation letter must contain the following information:
- Name of the creditor
- Amount to be collected
- That the debtor has the right to dispute the debt, which must be done in writing within 30 days
- That you can request the identity of the original creditor in writing within 30 days, if it’s different from the current creditor
- That once you have disputed the letter in writing within 30 days, no further action can be taken to collect the debt until validation is provided
Item No. 4 on the list is a particularly important thing to understand when debt may be packaged and sold, repackaged and resold, ad infinitum. An example is a letter telling you that you owe a debt to “Midland Credit,” a company you’ve never heard of. Before you become alarmed that there’s been a mistake, request the name of the original creditor from the debt collector. They might inform you that Midland Credit is actually a Capital One card, which will clear up your confusion. It’s important to realize that no collection activity can go forward until they supply that information in response to your request, providing you a reprieve until all uncertainty is cleared up.
How to request a debt validation letter
Debt collectors must send out your debt validation letter within five days of the first time they contact you. This means that you should receive it a few days after that, unless if the debt collector has an incorrect address for you, it may take longer for the letter to get to you (if it arrives at all).
If you don’t receive the letter when you expect it, you still have the right to dispute the debt in question. Imagine you get a phone call from a debt collector, then two weeks go by without a letter arriving in your mailbox. Your best step to take at this point is to call the debt collector and request the letter.
In many instances, the problem is that they are using an old address for you. If that is the case, the debt collector will likely ask to verify your address over the phone. Some debtors who aren’t prepared to deal with the debt may hesitate to verify their address. Certainly no one can force you to provide your current address to the collector, but withholding it can negatively impact you down the line when you’re finally forced to account for the debt.
“Some people feel they don’t want to give their address and be harassed,” said Joshua Cohen, a consumer protection attorney at Cohen Consumer Law. “If that’s how you feel, then you should go to a consumer attorney to know all your rights. There’s nothing worse than going in front of a judge and saying, ‘I didn’t get my letter.’ And then having the collector say, ‘We didn’t have the right address and he wouldn’t verify the address.’”
Keep in mind that it’s good practice not to supply any personal information over the phone until you have verified that the party you’re talking to is a legitimate debt collector.
Responding to a debt validation letter
If you would like to ask for validation of the debt after receiving a debt validation letter, it’s a good idea to use a template to make sure you’re expressing yourself clearly in a way the debt collectors will understand. Send the letter to the debt collector at the address provided in the debt validation letter. There are many templates for such letters available online, including some by the Consumer Financial Protection Bureau (CFPB).
The letter you write will depend on your response to the debt validation letter. For instance, you will write a different letter if you believe the debt is not yours versus if you simply need more information before you can figure that out. If you believe the debt is not yours, though, remember that debts are bought and sold, so the fact that you don’t recognize the creditor’s name does not mean there has been a mistake. It’s best to find out all information possible before you conclude that you’re being held responsible for someone else’s debt.
The CFPB advises that you make sure to find out all of the following information, some of which should be provided in your debt validation letter and some of which you may have to ask for in your response:
- The name and contact information of the debt collector
- The total debt amount, including any fees such as interest
- The reason for the debt and the date it originated
- The identity of the original creditor
- Any information the collector is using to justify their conclusion that it is you who owns the debt
It is a good idea to keep a copy of this letter and to send it via certified mail with a return receipt, so you have a paper trail of your communication with the debt collector.
What happens after you’ve sent a validation request?
Once you’ve sent your validation request, the debt collector does not have a deadline to respond. It’s a common misunderstanding that the collector only has 30 days to respond to a validation request, but in truth, they can take as long as they want. That open-ended time frame is a benefit for debtors since the debt collector can’t contact you during the period that they’re working to validate the debt.
“If they take six months to validate, that’s six months they can’t bother you,” said Cohen. “The only thing they’re allowed to do is to say, ‘We’re not collecting this debt anymore.’”
Relinquishing the debt collection altogether does indeed happen. As a general rule, if the debt collector doesn’t respond to the validation request within 90 days, then you’ll likely never hear from them again.
If they do respond, they will provide some amount of information, but often not as much as the debtor wants or has asked for. Unfortunately, the debt collector is not required under the FDCPA to send the debtor a full accounting of the debt, the promissory note or the full agreement.
Many consumers assume that debt in collection cannot go forward unless the debt collector can provide the promissory note, but that is not the case. The debt collector is permitted to submit validation of the debt that basically amounts to a statement from the creditor saying you, the debtor, owe the amount in question.
Once the debt collector has responded to your request for information, they are allowed to resume collection efforts. If you still doubt whether the debt is yours upon receiving whatever information the debt collector provides, you can take action to try to clear up the confusion. If the debt collector can’t provide proof, you can try calling the creditor directly at the contact number provided on your credit report. There are times that a debt collector will decide not to pursue your debt at this point, or they may keep pursuing it until you can definitively prove it’s not yours.
“Debt collectors want to do their job the right way,” said Cohen. “Despite what people think, they want to do it the right way. The more proof you send about the debt not being yours, the better they can do their job and talk to the creditor about not making you pay the note.”
However, if you aren’t able to get this proof and you feel confident the debt isn’t yours — whether you’ve been a victim of identity theft or there’s been a mistake — you should go to a consumer attorney. You can dispute the debt with the creditor and with the credit reporting agencies, which an attorney can help you with. The problem may resolve itself, but if it doesn’t, you’ll probably have to proceed to litigation.
“If the debt isn’t legitimate, the debt collector is the least of your problems,” noted Cohen.
Debt validation letters bring a sense of order to the process of debt collection and provide important protections for those who are being asked to pay large sums by debt collectors.
Those who owe a debt but can’t pay will need to deal with that fact sooner or later; the receipt of a debt validation letter may be a good motivator to contact a consumer attorney to understand your options. Looking to an attorney is also a good idea if you’re being pursued for a debt you’re certain isn’t yours. The debt validation letter will be one of the first indications that something fishy is going on.