Validation of Debt with Collection Agencies
Falling behind on payments is a difficult situation. Often
times, our accounts become delinquent because of life changing
events that may be out of our control. Accidents, job losses,
natural disasters and even divorce can put a serious strain on
finances.
Once an account is over 6 months delinquent, then creditors
will typically charge off the account. When a collection agency
takes over, their first order of business is to mail you a
letter to advise you that you owe the debt. This is an important
letter because it establishes a special statute of limitations
of 30 days. You have only 30 days to dispute the debt if there
is any aspect that you do not agree with. After 30 days, if you
fail to dispute the record, then the debt is assumed to be
valid, and normal collection activities can begin.
Often when one of these initial letters arrive, they are
ignored because they rarely threaten major action. The purpose
is to inform you of the debt and that they have been assigned to
pursue collection of the debt. However, this letter is designed
to be low key so that few recipients exercise their right to
dispute the debt.
Sometimes debts include amounts due to unauthorized charges,
excessive fees, credit card fraud or even forms of identity
theft. If these are factored in, it is essential to dispute the
debt within this 30 day window. Otherwise the debt is
"validated" and you can expect the collection agency to pursue
it vigorously.
When disputing the validity of the debt, make sure that you
do so in a well written letter. Advise of any proof that you
have, and inform the collection agency that you have copies of
this proof. You can send them a copy (never the original) along
with the letter to dispute the debt. Always keep a copy of your
dispute letter along with their original letter for your
records. Also, in order to establish proof that you are
disputing the debt, send the dispute letter via certified U.S.
Mail and keep the return receipt postcard when it arrives.
Disputing the debt does not mean it necessarily will go away.
In fact, the collection agency frequently may pursue collection
activities anyway if they deem that your dispute is without
merit. However, if you are going to fight it, then this dispute
is necessary in order to avoid validation of the debt. If the
collection agency ever pursues a judgment, then you will have an
important component of your defense already taken care of.
See
Articles: Handling Collection Agencies and Old Accounts
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