The Fair Debt Collection Practices Act (FDCPA) requires debt collectors to follow certain procedures when a debtor disputes all or a portion of the consumer debt in question. Debtors may dispute part or all of the debt and ask for the identity of original creditor. The collector must stop all action until a response is made. This response must comply with the following guidelines:
Timing is in the Debtor’s Hands
The debtor is required to send the dispute letter to the collector within 30 days of receipt of the initial validation letter. Courts have held that a failure to comply with this requirement is a waiver of the right for validation.
A Proper Response is Key to Continuing Collection Efforts
When a collector receives a dispute letter from a debtor within the 30 day period, all collection action must cease until a proper verification of the debt is sent to the debtor. This verification must be complete and detailed, providing all information needed to show that the debt is real; indicating the original creditor; and showing the amount due.
What Constitutes Valid Documentation?
Although unclear exactly what constitutes valid documentation, courts have considered these to be valid in some cases:
- The original creditor’s account statements, indicating the debt
- Copies of loan agreements or credit card applications, if signed by the debtor
- Payment histories between creditor and debtor
- Itemized accountings of the debt
- Copies of the judgment, if one exists
Respond, or Don’t Collect
If you do not want to respond for whatever reason, you can stop all action and close your file. The law does not require you to respond so long as you do not take any further action to collect.
It is important to comply with the verification requirements of the FDCPA so that you are able to continue pursuing the debts in question. Thus, keeping records from the beginning will greatly benefit the pursuit of bad debts should the need ever arise.
Hiday & Ricke, P.A. is a full-service creditor rights firm with the capabilities to assist in the collection of virtually any category of bad debt. Contact us today at [phone2] if you need advice or guidance on how to begin.