There is an important question that I have been unable to find any reliable information on: What, exactly, constitutes validation of debt? The statute (FDCPA) says that such validation must be provided by a debt collector when requested to do so by the consumer, or cease collection activities. However, it does not say what that validation should consist of. Thus, it seems that this determination has been left to the courts.
The only decision that I have been able to find on this was rendered in 1999 by the 4th Circuit Court of Appeals (Chaudhry v. Gallerizzo, 174 F.3d 394). The opinion of the Court was that "verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt."
This is a disturbing statement. It seems like they are saying that debt verification consists of the debt collector stating in writing that "you owe because we say you owe." It leaves the consumer in the lurch, so to speak.
Would anyone else care to comment?
I have struggled to find an answer on this also, no one seems to know. Willl wait and see what typ of answers that5 you get here.
credit
I have OC's and CA's on my CR.....like SOO many other people, I'm sure. I'm REALLY starting to try to clean up my credit now. Do I send a DV to BOTH the OC's and the CA's?
Hi Chargers
You need not send debt validation letters to both the collection agency and the original creditor. Check out your credit report and find out the latest listing against the debt. If it is the name of the collection agency, then send a debt validation letter to the CA and if it is the name of the OC, then send a debt validation letter to the OC. However, if the debt has been sold off to the CA by the OC, (which you can become sure of if the CA validates the debt) you need to come to a pay for deletion agreement with the CA to get the negative listing removed from your report as soon as you pay off the debt in full.
credit
Thanks, ANTHONY, for the reply. If the debt is PIF with the CA, and the CA removes the debt, does the debt, listed with the OC, AUTOMATICALLY come off, too?
Hi swsabean
If you send a debt validation letter to the collection agency, then the CA should send you a copy of the agreement between you and the original creditor, proof that the OC has either sold off the debt to the CA or has transferred the right to collect the debt to the CA and the statements of the outstanding amount. However, if the debt is still with the OC, and you send a DV letter to the OC, the OC must send you a copy of the original debt agreement and the statement of outstanding amounts.
Hi Chargers
If the debt has been sold off to the collection agency and you come to a repayment agreement with the collection agency, then only the CA listing gets removed from your report and not the OC listing. The OC listing will however stay in your credit report for seven years. Only if your debt has not been sold off to the CA and the OC still owns your debt (if the OC has only transferred the right to collect the debt to the CA then the OC still owns the debt) and you come to a PFD agreement with the OC and pay off the debt to the OC, then both the OC and the CA listing will be removed from your credit report.
credit
WOW!! That's a good explanation 'in a nut shell.' I appriciate the help. Just trying to 'attack' my credit now. Just trying to get ideas, where to start, etc.
swsabean,
Getting back to your original question. Proper debt validation is a copy of the original agreement between you and the creditor, signed by you. They need to have that original contract plus proof that they have bought the debt and that it now belongs to them which would entitle them to legally collect. Can you tell us how old this debt is and with whom the creditor is? States have statute of limitations in which gives them a certain period they can legally sue and win on a debt. Each state can have a different time period. If you are having a problem with a debt collector, you need to know the date of the last payment you made on the account they are suing for to see of you are protected.
Thanks to everyone who has responded so far. The question I posed was not related to any particular credit problem, although goodness knows I have plenty of those. It was a general question. Basically, my question is this: What is the legal status of debt verification?
Now, I have seen information here and elsewhere that claims that the debt collector must provide a signed contract with the original creditor, and/or detailed billing information, and/or information regarding the purchase of the debt, etc. For those who believe this to be the case, my question is, where are you getting your information?
The standard scenario, as described here and elsewhere, is that when one receives a collection notice from a debt collector, one fires off a letter to the debt collector demanding verification of the debt in the form of the detailed information listed above. If the debt collector does not comply with the request as stated, and continues collection activities, the one can file a lawsuit in Federal court for violations of the FDCPA.
But this is exactly one of the issues at stake in Chaudhry v. Gallerizzo. What makes the case troublesome for the consumer is that the 4th Circuit Court of Appeals, in upholding the decision of the lower court, gave in their opinion the rather slim definition of debt verification that I quoted at the outset of this thread.
Now, I freely admit that there may other cases which shed more light on the subject. But, at this time, I have been unable to find any. I have also checked the Staff Attorney opinions of the FTC, but I have not found anything relevant there either.
As always, I welcome further commentary on this important issue.
More bad news. I found another case relating to debt verification. In 2006, the 9th Circuit Court of Appeals affirmed the Chaudhry Court's ruling in Clark v. Capital Credit & Collection Servs. (460 F.3d 1162). Here is what the Clark Court had to say on the issue: "we adopt as a baseline the ... reasonable standard articulated by the Fourth Circuit in Chaudhry v. Gallerizzo"
credit
If I asked a OC or CA for a DV letter, do they have a certain amount of time to send it to me? What if they DON'T send me one within the 'time allowed'? Anything I can do? Do I just ASSUME the debt is NOT validated?
Hi swsabean
It is true that if you get a collection notice from the creditor or the collection agency, you need to send them a validation letter asking them for details like the outstanding bills and a copy of the original signed contract. But you can also send a validation letter if a debt collector or OC lists his name in your credit report against a particular debt which you think you do not owe.
Understand the difference...
There is a difference between "validation" and "verification"...
Validation requires the collector to work in concert with the original creditor, and requires them to actually view "original source documents" from the original creditor. This is the process required by consumer's written request, upon receipt of the very first communication from the collector.
Verification, however, is simply a very vague check of the basic information. This is the process used by he bureaus, upon receipt of a consumer dispute...
Unfortunately, most collectors ONLY perform the VERIFICATION process, and not VALIDATION... And they get away with it, because no one calls them on it...
Truth be told, there exists no real statute to require that they send a copy of a contract. That is more viable in civil action... Law 101... "No contract, no debt." There's also a significant amount of other information that atty's ask for in civl cases, that is not required by statute...
That's a question best suited for a lawyer in *that* state!
One could argue for a distinction between validation and verification. The FDCPA appears to use the terms interchangeably. Also, the cases I quoted above are both referring to debt verification within the context of the FDCPA, section 809(b) in particular.
Imagine the following scenario: I receive a collection notice from a CA. I send them a letter demanding that they validate the debt with a copy of a contract signed by me, as well as other details. I receive a reply which consists of a copy of a billing statement from the OC and a letter which says, "We have verified that the amount claimed is the amount owed. By the way, we are not sending you a signed contract, or any of the other stuff you asked for, because the Federal courts have repeatedly ruled that we are under no obligation to do so under the FDCPA. Have a nice day." What recourse do I now have?
To be sure, I have used the debt validation tactic successfully in the past. The CA's involved backed off. But now, I am dealing with one that refuses to back off. And the more I look into it, the more it begins to appear that a demand for debt validation is nothing more than an intimidation tactic, with no substantial force behind. Essentially, it looks like a bluff.
Now, they are not going to sue me for the amount they claim I owe. First, the amount is too small to justify the effort. And second, if all they have is a billing statement, which would not constitute admissible evidence in court, then they have nothing. So, it looks like we have a standoff due to a disparity in the standards of proof between the FDCPA and the Uniform Commercial Code. They will continue to ding my credit for another five years or so, and I will continue to say, "Go ahead and file a lawsuit. You have nothing and we both know it," until the SOL expires.
The good news is, I read about a case where an Indiana state appeals court recently set a much higher standard for debt verification under the FDCPA than did the 4th and 9th Circuits. I have not yet read the case, but I will report back when I have.
credit
WOW!! Actually.......not to sound ignorant, BOTH Validation and Verification sounded like it was the SAME. Isn't a CA obligated to send you the signed contract, etc?...I mean, by law?
SWSA, So are you saying that they do not have to provide proper validation? I had always thought it was the debtors right and that they had to have the original signed contract. Most usually will not bother with some small amoount but we know how that small amount can have all kinds of charges added on it making it almost double into an amount
worth suing for. Please if you could explain if this statement is just a way the collector blows off your request for validation or if it is a true statement:"We have verified that the amount claimed is the amount owed. By the way, we are not sending you a signed contract, or any of the other stuff you asked for, because the Federal courts have repeatedly ruled that we are under no obligation to do so under the FDCPA. Have a nice day." Thanks
credit
No, ROBERT..never been there. I'm with you, FIREYONE. ...a bill doesn't tell me anything. And that's what I tell the CA's when they send them to me. I want some kind of proof that I owe the debt. I have actually had a CA tell me they weren't "obligated" to send me anything. Geez!!
Hi fireyone. What I mean is this: If you got a response like that from a CA, what could you do about it? To me, it looks like you have two options.
1. Do nothing. In this case, nothing has been gained and you have the sort off standoff situation I now have.
2. File a lawsuit in Federal court against the CA for violation of the FDCPA. In this case, you had better have some pretty good arguments why the court should overturn the precedent established by other Federal courts. Otherwise, not only will the court likely rule against you, but you and your attorney may also be subject to sanctions for filing a frivolous lawsuit.
But it is not all doom and gloom. If the CA wants to sue you for the amount owed, then they will have to provide the sort of documentation you describe. As Doc said, no contract, no debt. And they probably do not have it.
I am not sure exactly what I would do about it but I would report them to the atty generals office. Then if I got a summons I would reply to it. If it went to court I would take the old bill along and let the judge know they were unwilling to provide true debt validation.
Hi swsabean
Since they have not properly validated your debt, you are not obligated to pay them off the outstanding debt amount. Moreover, if they sue you to the court, you can show the letter to the court that they have send you. But once you receive a court summon, you should always file a response to the summon else the creditor can bring a default judgment against you to recover the outstanding debt amount. You need not worry because the creditor cannot legally recover the debt without validating it.
I think what happens in a lot of cases is that the collection agencies buy what they deem to be junk debt, debt that could not be collected by the original creditor in a set amount of time or debt that they figure they won't get paid for anyway. These debts are written off by the original creditor and the collection agencies buy it for pennies on the dollar figuring they can turn a quick profit. However what the original credit fails to provide them with is the proper paperwork to show that they have the right to transfer the debt to the collection agency and that the collection agency can now legally collect on it.
the collection agencies just assume that most consumers of credit do not know the law behind the collection efforts. Fortunately for them, alot of folks don't and they can threaten and intimidate and have people pay for a debt that is uncollectable to begin with. This happens all the time in statute of limitation cases. The debtor does not know and if the collection agency can squeeze out any amount it starts that clock all over again.
We are fortunate enough to have found this site and have shared experiences and learned enough that they can not pull the crap on us.
This is why they are called junk debt collectors. There have been laws in place for these types of agencies but they are not as well known to people who honestly just fell back on debt. They should have something in writing on credit card applications that tells a person to make sure they know there rights or maybe calling it "understanding your rights ". There is nothing out there that even tells you that there is laws to protect you unless you start your own interenet search.
In my own particular case in dealing with a recalcitrant CA, it is now pretty clear what will happen. I am not going to sue the CA for violations of the FDCPA because I would probably lose. They are not going to sue me for the amount claimed because they would probably lose. They will continue to report negative entries on my credit reports until the debt expires. And I will live with that until the debt expires. So, my plan to improve my credit score has, in this instance, utterly failed.
Nevertheless, it has been illuminating. I now believe that I have a pretty good understanding of what the courts have decided about debt validation under the FDCPA. Sadly, the requirements for debt validation under the FDCPA are not nearly as stringent as I was previously led to believe.
I have not yet had an opportunity to look at the Indiana appeals case, but I feel that it is not likely to carry much precedential weight in a Federal court.
Your right some things are just best let go. If your debt is past the SOL time period I would just leave it alone. It amy seem like a long time the seven and a half years it takes to fall off but the time passes quickly and you can rebuild your credit .The older the debt the less impact also. Usaully once a debt becomes 3 or more years old it isn't really holding you back much.
Hi Swsabean
You need not sue the creditor or the collection agency to get the negative listing removed from your credit report. All you need to do is to send a dispute letter to the credit bureaus with the copy of the letter that you have received from the collection agency. The credit bureaus will verify it with the CA and get the listing removed from your credit report.
Swsabean, If you are looking for good samples of debt validation letters we have them here at the website. Type sample letters in the search box or debt validation letters and you will get some good ones. If you need any help just ask someone will guide you there.
This forum has a lot of sample letter for our help. We can personalize these letters by just changing the name and address of the collection agency or the inquirer (if there is a hard inquiry), and our name. You can find such letter if you visit the link letters of credit
You can also find them on the debt forum, it will be under the do it yourself section on there. goodluck and keep us updated.
Yes Good natured the debt forum is also an excellent source for ingormation. I have been to the forum myself and have found it is also a very helpful forum. Usually if you can not find what you are looking for here you can go over there and find it. I often forget to refer people to that forum.
I used to be very active in the debt forum when I was going through payday loan hell, they really helped me out, the letters came in very handy in the day that I did not have a clue. Starting out sometimes you are just clueless where to begin?? Clueless??
Do they have copy of sample letters over at the debt forum too? If so then I may go over and take a look at those. Let me know.
debt validation
Why dont you just pay your bill. offer this CA a settllement offer. you did the right thing in paying back what you took and the CA will let the credit bureaus know you settled the account which will increase your credit score. the advise from everone else is wrong. they are telling you not to pay your bill and where to get letters to help you. Remember a debt will never go away unless it is settled, discharged or resloved. PER the FDCPA once you dispute a debt in writting all the CA has to do is cease collection efforts. the account will then go to another CA and the cylcle bigins all over again. you will spend more money for certified mail that just settling the debt.
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