Many consumers do not know that once a delinquent account is reported to a collection agency a consumer has a short amount of time to pay the bill. This is because collection accounts are put on a nationwide registry and each collection agency in the country gets notified of a collection account. However, only one collection agency has a legal right to collect money on a delinquent account.
It can be very difficult trying to make payments on a collection account because a collection agency holds a collection account for a few months, it they are unsuccessful in collecting on the debt owed the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against the consumer.
Collection agencies don’t want you to know that as a consumer you have a legal right to question the validity of a collection agency which is called debt validation. Many consumers have paid money on delinquent accounts to a particular company only to find out that the company did not legally have a right to collect money on that account. As a result the consumer still owed the money on the delinquent account. To prevent this from happening to you, here are 7 ways to validate a debt and ensure you are paying the right creditor or collection agency:
1. Request the creditor, collection agency or attorney to provide documentation that the company is authorized to collect on the debt. Ensure the name and address of the collection agency appears on the documentation which should be on company letterhead.
2. Ask for proof of the total amount of the debt including payment history from with the original creditor and status of the account. Verify the documentation against your own records.
3. Request the collection agency to provide the original contract or other documentation showing the agreement you made with the original creditor including the name and address of the original creditor.
4. Ask the creditor to provide a copy of their business license to prove they are licensed in their state to collect money on delinquent accounts. However this varies from state to state.
5. If the creditor use profanity, harasses you, is rude or threatens you inform the collection agency that they are subject to the Fair Credit Reporting Act (FCRA), they might argue and say they are not but they are considered debt collectors and are covered under the act.
6. If the creditor cannot verify the debt they cannot collect any money owed on your account and is not allowed to contact you about the debt. They also cannot report the account on your credit report.
7. A creditor may respond to your debt validation letter by sending you a summons to appear in court. This is a scare tactic and is illegal. A creditor has to validate the debt before they can file suit against you.
Keep records of all documentation you receive and all documentation you mail. Send all documentation via certified mail with return receipt. If you find that the creditor or collection agency is violating the FCRA you can file a complaint with your local small claims court, notify the credit bureaus and file complaint with the Federal Trade Commission