Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.
Suppose you are sitting on a Sunday evening, ready to watch a professional football game on TV, when the phone rings. He’s a debt collector calling to demand payment of a debt you can’t remember. What are you doing?
A typical response might be to hang up, shake your head, and check that the nachos aren’t overheating. But it might be better to take a few seconds to ask and write down the names of the caller and the collection company, as well as the address and phone number of the company. Then, before you settle in to kick off, write down the sending of a debt verification letter.
Never heard of one? A debt verification letter is a powerful tool that a consumer can use to fend off unscrupulous, abusive, or just plain wrong debt collection efforts. It’s a document you can send to someone that says you owe money to let them know you don’t recognize the debt, ask them to prove you owe it, and ask them to leave you alone.
18% to 25%
On the secure site of Nationaldebtrelief.com
Consumer debt collection protections
It may seem unlikely that a simple letter could be part of an effective approach to dealing with ill-advised debt collection efforts. But it is real. The mechanism is put in place by the Fair Debt Collection Practices Act (FDCPA), a 1977 law passed by Congress to curb debt collectors.
When you send one of these letters to a collector, the business is expected to return a debt validation letter to support their claim. If he can’t or won’t, the claim is likely to be dropped. If this happens, you won’t have any more playtime interruptions, at least from this collector.
It is far from a solution in search of a problem. About 70 million people, one in three consumers, were contacted about debt collection in 2020, according to the March 2021 annual report of the Consumer Financial Protection Bureau (CFPB), a federal agency responsible for enforcing the FDCPA. .
More than half of these consumers said the debt collector was wrong. The main problem, reported by almost half of those who reported an error, is that someone else owed the debt. Other reasons included never receiving the product or service the debt was supposed to pay for or experiencing identity theft. Some said they had already paid off the debt or paid it off through bankruptcy.
The debt verification letter is the consumer’s first defense against errant debt collections. Not using it is often, but not always, a mistake. If you don’t send one, a debt collector can assume the debt is valid and continue with the collection. If the debt isn’t legally valid and the debt collector has little or no chance of forcing you to pay, a debt verification letter can quickly roll them back.
Basics of the verification letter
The letter you send to a debt collector and the letter the collector returns may be called debt verification letters or debt validation letters. There is no strict labeling protocol. However, it seems confusing to use the terms interchangeably. This article will refer to the borrower’s letter as the debt verification letter and the collector’s letter as the debt validation letter.
A debt verification letter doesn’t have to say anything fancy. Just say you’re responding to a collection effort, don’t acknowledge the debt, demand that they prove you owe it, and if they can’t, stop contacting you. That’s it.
You can find different models of debt verification letters online. Some are of considerable complexity and deal with several other issues. You can, for example, ask for the contact details of the original creditor. This could be useful as debt collectors usually buy old debts to collect whatever they can.
The debt collector may know little or nothing about the transaction that initially created the alleged debt. And, challenged to produce a document such as a note or contract justifying the debt, the tax collector may simply give up the fight. But a basic debt verification letter can also accomplish the same thing.
Timing is an important and specific concern. The consumer has 30 days to send the debt verification letter. If you do not deal with it within a month, the debt may, again, be deemed valid and collection efforts may continue. The debt collector then has five days to respond in writing. Failure to do so doesn’t mean you don’t owe the money, but it could be grounds for suing the collection agency.
How you send your letter is also important. Email, fax, regular mail, and other untracked methods are not good. You need a way to show that you posted the letter, when you posted it, and that it was delivered to the recipient. U.S. Postal Service Certified or Priority Mail can provide this level of tracking.
Find out if you qualify for debt relief
Free estimate without obligation
Basics of the validation letter
The validation letter is that of the debt collector to you, the supposed debtor. He’s supposed to back up his claim with some sort of proof. The FDCPA is a bit vague here, but the supporting documents could be, for example, a copy of a court judgment confirming the debt. If you ask for the name and address of the original creditor, which could be a credit card company, bank, retailer, utility, etc., the validation letter is supposed to include it.
The original verification letter the debtor receives will rarely include proof that the original creditor officially assigned the debt to the collection agency. Agencies buy these debts for large markdowns, usually pennies on the dollar, hoping that they will be able to raise enough to make a profit.
However, they usually do not arrange for the creditor to formally assign the debt to the collector. Without this, they may have little ability to pursue debt beyond simple demands. Typically, debt collectors want to avoid costly court appearances, and if they do not have the required documents, they are even less likely to sue.
A verification letter is a good way to weed out scammers and scammers. Scammers rarely respond to a verification request. Even legitimate debt collectors should stop contacting you about a debt after they receive the verification letter, at least until they respond with a validation letter.
If you receive a validation letter, it might not verify much. Skepticism is in order here. If the letter consists of pages of what sounds like complicated lawyer language, this just might be an attempt to overwhelm you.
If you get some solid validation, like a contract with your signature on it, that doesn’t mean you owe or owe everything they ask for. You can also require a detailed statement of the amount. These could be attorney fees or other fees that you never agreed to pay and probably don’t have to pay.
Even though the debt looks valid, well documented, and not inflated, you may still not have to pay due to the debt statute of limitations. States have different laws on this, but the term typically lasts three to six years. Check with your state’s attorney general’s office to be sure. If a debt was incurred longer than the statute of limitations indicates, it is probably no longer valid and you won’t have to pay it.
Limitations and advantages of the validation and verification letter
Validation and verification letters can be helpful but will not solve all debt collection problems. For example, a collector may continue to try to collect a debt that has exceeded the statute of limitations. They just can’t force you to pay it.
Also, whatever the outcome of your verification and validation correspondence exchange, it won’t necessarily affect your credit report. Debt someone is trying to collect may not even show up on your credit report. If it does, a bad debt may appear on your report for up to seven years, whether or not it is posted. The same applies if a claim is excluded from collection because the limitation period has expired.
Sometimes, however, debt verification letters are just the ticket. A debt verification letter can be very effective in a real case of mistaken identity, for example. Also, if a debt is several years old, a debt collector may not be able to produce documents proving that you actually owe it.
Likewise, when a collector has purchased a debt from the original creditor, it can also be difficult for the collector to document it. In these cases, a request to stop bothering you about the debt is likely to be effective.
While debt verification letters are powerful, sometimes you might not want to send one. For example, if you are planning to pay off debt, you might not want to require proof that you owe it. It may be faster and easier to simply offer a reduced lump sum payment rather than blasting the collector through aimless hoops.
Also, if a debt is about to exceed the statute of limitations, it may be wiser to do nothing. It is possible that in your communications, for example, you inadvertently acknowledge the debt. This could restart the collection period. Another time to consider skipping the verification letter is if the request is from the original creditor rather than from a debt collection agency. Presumably, the original creditor has all the documents at hand. You might be better off trying to get a deal done quickly.
Your rights as a debtor
Debt verification and validation letters are two of FDCPA’s many protections. Collectors are also prohibited from calling before 8 a.m. or after 9 p.m. local time, contacting you at work if you tell them not to, telling someone else about your debt, harassing you. or lie about what you owe. They can’t pretend they’re law enforcement, threaten with arrest, use a false name, or try to slip inaccurate information about you into your credit report.
There is much more to the FDCPA designed to give hard-pressed consumers a rest from predatory collectors. If a verification letter doesn’t help, or if you have concerns about a collector, you can complain to the Federal Trade Commission or your state attorney general. During this time, you can take note to send this letter and get back to your game, knowing that you have real options for defending yourself and your finances.
Find out if you qualify for debt relief
Free estimate without obligation