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May 29, 2023 Collections , Uncategorized

What is a Debt Validation Letter?

When you have a debt that goes unpaid, the creditor may take action to collect the money owed. A company may begin by contacting a person directly but may turn over the debt to a collection agency or other company to collect the debt. The collection company acts on behalf of the creditor to collect money that is owed. A collection company has the obligation to provide a debt validation letter to a debtor as part of the debt collection process. 

What is a Debt Validation Letter?

A debt validation letter is proof that a person owes a debt. The letter is a document that provides you with the details of the debt such as the name of the creditor and the amount of money that you owe. A debt validation letter may be a follow-up to a verbal conversation between the collection agency and the debtor. If the collection company contacts a creditor by phone, the creditor may ask for written verification of the debt. Rather than discussing the matter over the phone, the creditor must then provide a written debt validation letter to the debtor within five days. 

What is Included in a Debt Validation Letter?

A debt validation letter must include some important details. The following should be part of a debt validation letter:

  • Creditor name
  • Amount of debt
  • Right to dispute debt

The debtor has the right to dispute the debt. The debt validation letter must include details for how a debtor can dispute the debt. The debtor must dispute the debt in writing within 30 days. If the debtor fails to dispute the debt, the debtor assumes that it is valid. If a debtor disputes the debt, the creditor must provide evidence of the debt in writing. 

How to Dispute a Debt

If a consumer does not agree that they owe the debt, they may request more information. The first step in disputing a debt is to request information upon receipt of a debt validation letter. Someone may dispute a debt because they do not feel it is valid or because the statute of limitations for collection of the debt has been reached. When you dispute a debt, the collection agency cannot call you or contact you until they provide you with proof of the debt in writing. When you dispute a debt you should send the dispute letter by certified mail so you have a record of when they received it. A skilled attorney will assist with debt collection matters. 

Documentation of Proof of Debt

After you dispute a debt, the collection company must provide you proof of the debt in writing. They should send you all the details of the debt that proves the amount, the creditor, the date, and other important data. If the creditor does not have the information necessary to prove the debt, they may end up dropping the debt completely. In that case, you may not hear anything further from the creditor. If the creditor provides satisfactory proof, the debtor should verify it against his or her own records. If there is a discrepancy, the debtor may take further steps to dispute the debt. 

Does a Creditor Have to Respond to a Debt Validation Letter?

When you receive a debt validation letter it is an indication that the creditor or collection company is taking action to collect a debt you owe. Many times, particularly if the debt is old, the collection company may not have enough details about the debt to provide. When that happens, the debtor may dispute the debt. However, ignoring a debt validation letter could likely result in further collection actions. Failure to pay the debt will cause the collection agency to report the default to the credit bureaus, which could have a negative impact on your credit score. 

How to Resolve Debt After Receiving a Debt Validation Letter

Once someone receives a debt validation letter and any documentation that proves the debt, they should take some steps to resolve the debt. In some cases, the collection company will be willing to take payments for the debt, rather than requiring a lump sum payment. This can be helpful to some people who are having difficulty paying. Another option that may be available is to settle the debt. The collection agency may offer a lower payment as a settlement for the debt. The payment would be less than what you owe, but it might still be reported as a delinquency to the credit bureaus. 

To learn more about debt validation letters and collection actions, contact Snellings Law, LLC today to discuss the details.