Always Start With a Debt Validation Letter

When a debt collector (not the original creditor) contacts you about an unpaid debt, we always recommend starting with a debt validation letter. Under the Fair Debt Collection Practices Act (FDCPA), that means you send a formal letter requesting that the collector provide proof that the debt is legitimate, that you are the person who legally owes the debt and that the collector has the right to collect the debt.

You’ll find a sample validation letter in our free Consumer Guide To Good Credit, along with more advice on what to do if you find yourself dealing with a collection agency.

There are some debt collectors who dispute this advice; they say that sending a validation letter is a trick or tactic to avoid repaying legitimate debts. Of course, we disagree. If a debt is fully legitimate, then the collector should have no trouble complying with the validation letter. It makes perfect sense for consumers to protect themselves legally by asking that debt collectors prove they are legitimate before any money changes hands.

During the housing crisis, we’ve seen stories where banks have tried to foreclose on the wrong properties, or on people who had paid off their mortgages in full. If these mistakes can happen between banks and mortgagees, then they certainly happen between collectors and debtors. Requesting debt validation is a quick and legally recognized way to establish legitimacy before you proceed to negotiate with a debt collector.

Remember, the validation letter doesn’t just establish whether you owe the debt, but to whom you owe it and how much. Many debt collection law firms will add fees and interest to the debts they collect, and send letters with unfamiliar amounts. Your validation letter will force them to account for all the money they are demanding and show how they arrived at the new figure. Law firms may try not to include these calculations because they don’t want you to see how much they are adding to the debt in legal fees.

The problem in all of this for debt collectors is that they often don’t have the original contracts and paperwork they need to validate a debt. If the debt has changed hands many times, it’s especially unlikely they will be able to comply with a validation letter.

Some lawyers who buy and collect debts respond to a validation letter with a lawsuit. They intend to use the court discovery process to get the documents they need to validate the debt, then win a judgment in court. There is court precedent to deny these lawyers a judgment in this situation [Spears v. Brennan 745 N.E.2d 862(Ind.App. 2001)]. They must respond to the validation letter before they can obtain a legal judgment; using the court discovery process to get the documentation they need to validate a debt will not satisfy the legal requirements of the FDCPA.

Remember, we do not offer legal advice; you should always seek the services of a qualified attorney if you need legal assistance.

PLEASE NOTE: does not provide legal advice. Please consult a qualified attorney before responding to lawsuits or other legal threats.

photo: MrBG via flickr cc