Why You Should Always Request Validation Of A Debt

If you’re working towards healthy credit, but dealing with credit challenges, we want to help. There’s a lot of advice out there, and it can be confusing to know what steps to take to build a healthy (and qualifying) credit profile. In our previous posts, we’ve outlined how you can prepare and execute on negotiating a collection. In addition to knowing how to resolve a collection, it’s important to understand why you should always validate a debt before payment.

Reason #1: Creditors make mistakes, often…

Collection agencies and their clients often have an “at their discretion” policy for reporting information to the credit bureaus. This leads to four common issues.

  1. Inaccurate Information Reported

  2. Incomplete Information Furnished

  3. Unverifiable Accounts

  4. Outdated Accounts Reported

Due to the lackadaisical requirements for furnishing consumer data, one if four consumers will see a mistake on their credit report. For those that have multiple collection accounts, the error rate can be dramatically higher. If you have a collection or derogatory account on your credit report, it’s your right as a consumer to validate the debt before taking any action.

Reason #2: Collection agencies are malicious.

Just this week, I had a client receive a phone call from a creditor giving them 24 hours to pay the account in full or else they’d take legal action. Normally, this type of call requires immediate action. However, there are a few problems that most clients look past. First, the call came in on a Sunday night, which is an inconvenient time for consumers, and could be a FDCPA violation. Second, the account is two years outside of the federal statute of limitations, bringing into question whether or not this is a legitimate debt. And finally, when we asked for written validation of the debt, the creditor refused. All of these are red flags, and are tactics used by predatory collection agencies.

Now that we’ve explored some of the reasons why it’s important to validate a collection, here is how you actually do it on your own.

#1. If it’s a new collection, and a collection agency contacts you via writing or over the phone, you have the right to request proof of the debt in writing. The company then has 30 days to provide that proof to you. Keep an eye on your mailbox, and open all of your mail. If they don’t send it, then you’ll need to contact them after the 30 day period to make sure they were unable to verify the debt.

#2. If it’s an older collection, you can send a request in writing directly to the creditor or collection agency requesting a verification of the account. Due to changes enforced by the CFPB, the creditor is required to respond within the same 30-45 day period as the credit bureaus. If you don’t get a response, follow up with the creditor and request for the removal or dismissal of the debt.

Obviously, this process can be painful and drawn out. Persistence is key, and knowing the rules will help you avoid paying on accounts that shouldn’t report on credit. Our goal is to make it simple and effective. If you have questions, or would like our team to take on the burden of casework, please don’t hesitate to contact us directly.