How to Respond to a Debt Collection Letter and What to Include in a Debt Validation Letter
Due to unforeseen circumstances, many consumers default on their debts. As a result, they will be contacted by debt collectors.
Thankfully, there are consumer protection laws that aid those consumers. One of those laws is the Fair Debt Collection Practices Act (FDCPA). Anyone who has received a debt collection letter should read the Act.
I am not an attorney, but I am a consumer. Due to my past experiences, I have been researching the Fair Debt Collection Practices Act and other consumer protection statutes for 10 years.
The following article is not based on my opinion. It is based upon the language of the FDCPA and court rulings.
In the case that I cannot provide court rulings to support what I have stated, I will not merely assume that my opinion is valid. I will state that I have been unable to locate a ruling to support my claim. If you have any questions, please ask, and I will respond.
I am also open to a friendly, respectful debate. Debate enables us to learn. As long as it is respectful and claims are supported by law, I believe debate would serve a useful purpose.
What's required in a debt collection letter, and how long you have to respond to it
You defaulted on a debt and have received a debt collection letter from a collection agency.
This letter is important. Do not ignore it.
The first collection letter you receive from a collection agency should include a validation notice. United States Code of Law, 15 U.S.C. § 1692g governs validation notices and requirements.
§11692g(a) states that within 5 days of an intial communication, a debt collector must provide a consumer a written notice containing (1) the amount of the debt, (2) the name of the creditor to whom the debt is owed, (3) that the debt collector can assume a debt to be valid if the consumer does not dispute the debt within 30 days after receiving the notice, (4) a statement that the debt collector must verify the debt if the consumer requests validation within 30 days of receiving the 30-day notice and (5) a statement that a consumer can request the name and address of the original creditor, if it's different from the current creditor.
In the event you receive a collection letter from a debt buyer who has purchased your debt, that debt buyer is considered the "current creditor". That is due to the fact that the creditor with whom you opened the account charged off and sold your account to the debt buyer.
The very first line references an "initial communication". That means the first communication. If the first communication is a letter, pay attention to what should be included in the letter. It should include the information referenced in (1) - (5) of the above-referenced section of the FDCPA.
And pay close attention to (3). If you choose to request validation of the debt, you MUST do so within 30 days of receiving the letter that contains that notice. That does not mean 30 days from the date the letter was written. That time limit is based upon the date you RECEIVE the letter in the mail.
Here is some help if you have been sued for a credit card debt
- It is always best to hire an attorney if you are facing a lawsuit. If you cannot afford an attorney and do not qualify for legal aid, there are sites available to help you.
- Please do not spend your hard-earned money on books for sale on the internet whose authors claim to know how to fight debt-collection lawsuits. You don’t know for a fact that the claims made by the authors of those books ate true.
- In addition, those books do not offer any more information that you can find for free on reputable websites. Reputable websites are populated with members across the country who can guide you, help you find the information you need, and won”t charge you a penny.
If you have received a summons and complaint about a credit card debt, I recommend the following two websites.
Things you don't need to include in a request for validation
Here is a list of items that some sites suggest consumers include in a debt validation request.
- What the money you say I owe is for;
- Explain and show me how you calculated what you say I owe;
- Provide me with copies of any papers that show I agreed to pay what you say I owe;
- Prove the Statute of Limitations has not expired on this account;
- Show me that you are licensed to collect in my state;
- Provide me with your license numbers and Registered Agent;
Those items are not required to validate a debt. Debt collectors do not have to provide a detailed accounting, proof that the statute of limitations has expired, or proof of license to collect a debt in your state.
Some Circuit Courts of Appeals have ruled on the issue of debt validation/verification.
"Contrary to Appellants' contention, verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. There is no concomitant obligation to forward copies of bills or other detailed evidence of the debt." Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Circuit Court of Appeals, 1999).
"We agree with the district court that '[v]erification only requires a debt collector to confirm with his client that a particular amount is actually being claimed, not to vouch for the validity of the underlying debt.'" Chaudhry at 406.
"We adopt as a baseline the more reasonable standard articulated by the Fourth Circuit in Chaudhry. At the minimum, 'verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed.'" Clark v. Capital Credit & Collection Services Inc., 460 F.3d 1162 (9th Cir.2006).
"This provision is not intended to give a debtor a detailed accounting of debt to be collected." Maynard v. Cannon, 401 F. App’x 389, 396 (10th Cir. 2010).
"We thus join other circuits in holding that the statute requires 'nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed.'" Walton v. EOS CCA, 885 F.3d 1024, 1028 (7th Cir. 2018)(see Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999); Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1173-74 (9th Cir. 2006).
Here are some lower federal court rulings.
"Plaintiff's dispute letter to Midland requests 'a copy of the contract which proves the amount of the alleged high balance which you are claiming. If you do not have a contract, then please provide specific and detailed alternate proof of the alleged high balance.' Again, the FDCPA does not require that Midland comply with this request. Instead, the statute simply requires a debt collector to confirm the amount of the debt and the identity of the creditor, and relay that information to the debtor." Myers v. Midland Credit Management, Inc. Slip Copy, 2014 WL 981311 (M.D.Pa.,2014).
"Furthermore, Himes's belief that validation requires disclosure of the signed loan agreement, a sworn accounting ledger, and affidavits attesting to the current status and validity of the debt grossly overstates a debt collector's obligations under the FDCPA. To sufficiently validate a debt, the debt collector need only demonstrate that the creditor has provided some evidence that the debtor owes the specific amount demanded; a credit card statement indicating the delinquent balance serves that purpose." Himes v. Client Servs. Inc., No. 12-321, 990 F.Supp.2d 59, 2014 WL 24258, 2014 U.S. Dist. LEXIS 125 (D.N.H. Jan. 2, 2014).
"Therefore, to sufficiently validate a debt, the debt collector need only demonstrate that the creditor has provided some evidence that the debtor owes the specific amount demanded. Here, the credit card statements provided by Schiff indicating the delinquent balance serve that purpose." Glowacki v. Law Offices of Howard Lee Schiff, P.C., No. 1:13-cv-11306-RGS, 2014 WL 2547919, 2014 U.S. Dist. LEXIS 77194 (D.Mass. June 5, 2014).
Misconceptions about debt validation
Unfortunately, some sites that recommend consumers send a detailed letter requesting documentation and information that a debt collector is not required to provide in order to validate a debt. While a consumer can request anything he chooses, a debt collector does not have to provide anything more than what the law requires.
The FDCPA does not require a consumer to request a laundry list of documentation. It merely requires the consumer to state that the debt is disputed and validation is requested.
There are those that will tell you that sending a detailed letter containing various requests informs a debt collector that you know your rights. That is incorrect. Requesting information that is not required informs a debt collector that you do not know your rights.
If you know your rights, would you request information that is not required by law? No. Anyone who advises you that a debt collector must provide certain information when that information is not required by law proves that the person has not researched the law.
The FDCPA does not require a debt collector to provide a copy of a debt collection license in order to validate a debt
Federal law does not require a debt collector to be licensed to collect a debt. That's a state issue. Some states require a debt collection license while others do not.
As a result, the FDPCA (which is a federal law) cannot require a debt collector to provide proof of licensing when your state has no such law. In the event your state does have that requirement, it does not mean that proof of licensure is necessary to validate a debt.
To date, NO court has ruled that proof of a collection license is required to validate a debt.
Do not include threats in a validation request
Do not include a "threat" in your request for validation.
Here's a common threat found in generic requests for validation.
"At this time I will also inform you that if your offices have reported invalidated information to any of the 3 major Credit Bureau’s (Equifax, Experian or TransUnion) this action might constitute fraud under both Federal and State Laws. Due to this fact, if any negative mark is found on any of my credit reports by your company or the company that you represent I will not hesitate in bringing legal action against you for the following:
Violation of the Fair Credit Reporting Act
Violation of the Fair Debt Collection Practices Act
Defamation of Character"
The above is both incorrect and unnecessary. What the proponents of that don't tell consumers is that certain requirements must be met by the consumer in order for those claims to have any teeth.
In order to have a claim under the Fair Credit Reporting Act (FCRA) (15 U.S.C. 1692), a consumer must dispute information in his credit report directly with the credit reporting agency (CRA). See 15 U.S.C. 1681s-2(b).
First, you have to make sure the debt collector is reporting on your credit report. If it's reporting, you then must dispute the information with the credit reporting agency (CRA) which would be Equifax, Transunion, Experian, etc. The furnisher must receive a notice from the credit reporting agency that information is incorrect.
In the event you make a dispute with the CRA, the only way you have a claim under the FCRA is if the reported information is incorrect and the furnisher fails to correct or delete it.
Simply sending a letter with a threat does not entitle one to a claim under the FCRA.
The following is from the 9th Circuit Court of Appeals.
These allegations fail to state a claim for violation of § 1681s-2(b), because such a claim requires the allegation that the furnisher of the information receive notice of the dispute from a CRA, not from the consumer. See, e.g., Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009) (duties of a furnisher under § 1681s-2(b)(1) "arise only after the furnisher receives notice of dispute from a CRA; notice of a dispute received directly from the consumer does not trigger furnishers' duties under subsection (b)")
In regard to the FDCPA, you only have a claim under the Act if the debt collector reports information AFTER you send a validation request within 30 days of the initial communication but has not yet validated the debt.
From the FTC and the 8th Circuit Court of Appeals.
This interpretation is confirmed by the relevant part of the Federal Trade Commission's December 1988 Staff Commentary on the Fair Debt Collection Practices Act:1. Disputed debt. If a debt collector knows that a debt is disputed by the consumer ... and reports it to a credit bureau, he must report it as disputed.
2. Post-report dispute. When a debt collector learns of a dispute after reporting the debt to a credit bureau, the dispute need not also be reported.
FTC Staff Commentary, 53 Fed.Reg. 50097-02, 50106 (Dec. 13, 1988)(emphasis added), followed in Black v. Asset Acceptance, LLC, 2005 U.S. Dist. LEXIS 43264 at * 12-13 (N.D.Ga.2005), and in Hilburn v. Encore Receivable Mgmt., Inc., 2007 WL 1200949 at *4 (D.Or.2007).
Notice "Post-report dispute". If the debt collector is already reporting your debt before you dispute the debt, it does not have to note your dispute as long as it ceases to update the entry until the debt is validated.
In regard to "defamation of character", you'd need to contact an attorney because that might be based upon state law. Whether or not the claim is based upon state law, you'd have to prove defamation based upon law.
In other words, except under certain specific circumstances, the threats are meaningless.
A summons and complaint from the court is not an "initial communication"
Some ill-advised persons will tell you to send a validation request after receiving a summons and complaint about a lawsuit.
The FDCPA specifies that a request for validation must be sent within 30 days of initial communication. A summons and complaint is NOT an initial communication that triggers your right to request validation of a debt. Note 1692g(d) of the FDCPA:
(d) Legal pleadings
"A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a)."
Congress amended the FDCPA in 2006 to clarify that "[a] communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a) of this section." 15 U.S.C. § 1692g(d). Carlin v. Davidson Fink LLP, 852 F.3d 207, 213 (2d Cir. 2017).
You can send a validation request after receiving a summons and complaint from a collection agency, but the plaintiff is not required to respond.
When is the debt collector required to respond?
Some misinformed individuals will tell you that the debt collector must respond to you within 30 days of receiving your letter. That is false!
1692g(b) of the FDCPA states:
"If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector."
Notice that the law provides that a debt collector must cease collection efforts UNTIL it verifies the debt. It does not place a requirement on a debt collector to respond to a validation request within 30 days.
In Gregg v. Hallinan (MD Pennsylvania, 2016), a Pennsylvania federal district court made the following ruling. “Section § 1692g(b) does not require the debt collector to respond to a debtor's debt validation request in a specific amount of time.”
Here are some rulings from some other courts.
"Once a consumer exercises this right, a debt collector must cease all further debt collection activity until it complies with various verification obligations." Brady v. Credit Recovery Co., Inc., 160 F. 3d 64, 67 (1st Cir. 1998), citing 15 U.S.C. § 1692g(b).
“Even if Trott & Trott were a debt collector, the firm was not required to respond to plaintiffs' demand for verification within any particular time.” Golliday v. Chase Home Finance, LLC, 761 F.Supp.2d 629, 637 (W.D. Mich. 2011).
“But, even a cursory review by plaintiff's counsel of the pertinent statutory requirements of § 1692g would have revealed that the statute does not require H&H to validate the debt within 30 days of plaintiff's request.” Smith v. Hunt & Henriques, 2013 WL 6141416 (N.D.Cal. 2013).
Junk debt buyers are allowed to place purchased accounts on credit reports
Some uninformed individuals will state that a junk debt buyer cannot place an entry on a consumer‘s credit report. That is incorrect.
Fair Credit Reporting Act - 15 U.S. Code § 1681c. Requirements relating to information contained in consumer reports
(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.
1692e(8) of the Fair Debt Collection Practices Act (FCRA)
(8)Communicating or threatening to communicate to any person information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.
The FDCPA only applies to debt collectors. This shows that a disputed debt applies to a debt reported on one’s credit report.
From the Consumer Financial Protection Bureau:
"Once the account is in collections, the creditor, debt collector, or debt buyer can report the account to one or more of the three largest nationwide consumer reporting agencies (NCRAs)."
“Once an account is sold to a collection agency, the collection account can then be reported as a separate account on your credit report.”
Midland Funding is a debt buyer. The following is from a consent decree issued by the Consumer Protection Financial Bureau with Encore Capital and Midland Funding.
“i. for those Consumer accounts where the Debt is Time-Barred and generally cannot be included in a Consumer report under the provisions ofthe FCRA, 15 U.S.C. § 1681c(a), but can be collected through other means pursuant to applicable state law, Encore will include the following statement: ‘The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due to the age ofthis debt, we will not sue you for it or report payment or non-payment ofit to a credit bureau;’
ii. for those Consumer accounts where the Debt is Time-Barred but can
be collected through other means pursuant to applicable state law, and may be included in a Consumer report under the provisions of the FCRA, 5 U.S.C. § 1681c(a), Encore will include the following statement: ‘The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it.’”
Notice that the two requirements state when Midland can and cannot report debts to credit reporting agencies. If a debt buyer were not allowed to report to credit reporting agencies, why would the CFPB include a requirement that shows a debt buyer CAN report a debt to credit reporting agencies?
There are those who claim that the agreement between Midland Funding and the CFPB is the law: That is not true. It is an agreement between Midland and the CFPB. The following is from the United States Supreme Court.
'[A] well-settled line of authority from [the Supreme] Court establishes that a consent decree is not enforceable directly or in collateral proceedings by those who are not parties to it even though they were intended to be benefited by it.'" Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750 (1975).
The Supreme Court of the United States has ruled that a consent decree is only enforceable when it is between the parties to the decree. The CFPB Consent Order is between the CFPB and Midland Funding. Therefore, it is enforceable only by the CFPB when it involves Midland Funding.
A Sample Request for Validation
The best validation letter is one that is simple and to the point.
Here is a sample letter letter to send to a debt collector within 30 days of receiving the initial communication.
Debt Collector's Name
RE: Account Number ________________
To Whom It May Concern:
I dispute the above-referenced debt and request validation.
That's it. Nothing else. That's all you have to do. You've disputed the debt and requested validation which is all the FDCPA requires of a consumer.
Again, it is not the duty of the consumer to inform a debt collector of the law. It's the debt collector's duty to know what the law requires to validate a debt.
Once a debt collection agency receives a timely validation request, it cannot continue its collection efforts until it responds to your request.
I would recommend that you send your letter via certified mail, return receipt requested. This will allow you to have proof that you sent your letter within 30 days of receiving the initial communication. The return receipt proves that the debt collector received your letter.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Questions & Answers
I read that if a bank charges off a credit card debt and takes a tax deduction that it can’t collect on the debt or sell it to a debt buying company. Is that true?
That is not true. The following is from the U.S. Code of Federal Regulations.
26 CFR 1.166-1 - Bad debts
(f) Recovery of bad debts. Any amount attributable to the recovery during the taxable year of a bad debt, or of a part of a bad debt, which was allowed as a deduction from gross income in a prior taxable year shall be included in gross income for the taxable year of recovery
Notice the above cited federal regulation states "[a]ny amount attributable to the RECOVERY". Then it states "which was allowed as a deduction from gross income in a prior taxable year".
Those phrases show that a business which claims a tax deduction for a bad debt is allowed to RECOVER some of that debt at a later time. Once it recovers some of that bad debt, it must claim the amount of the recovery as part of its income.
In the following ruling, the Michigan federal court noted that Chase and WFNB sold accounts AND were allowed to receive a bad debt tax deduction.
Instead of amassing interest on a worthless account, Chase and WFNB sought to sell the accounts and shift the risk of nonpayment to a third party for a nominal fee. This practice also permitted Chase and WFNB to remove the account from the financial records and receive a bad debt tax deduction. See I.R.C. § 166(a)(2). McDonald v. Asset Acceptance LLC, 296 F.R.D. 513 (E.D.Mich.2013).Helpful 6
I heard sending a letter will acknowledge the debt and restart the statute of limitations. Is this true?
That is not true. As long as you do not admit that the debt is yours, simply requesting validation will not mean you owe the debt and will not restart the statute of limitations.Helpful 5
I have missed the 30-day deadline to request proof of debt violation. I'm getting lawyers sending me advertisements for their services because a lawsuit has now been filed, but I haven't been served yet. What should I do?
You can call the court to see if a lawsuit a been filed against you. If it has, all you can do right now is wait to be served.Helpful 4
A creditor keeps calling and sending mail that I owe them a delinquent credit card balance. This account has never shown on my credit reports nor could I have opened an "elite" card a year after I had defaulted on 4 credit cards. I keep telling them it is not my account, and they simply say it is. I asked if possibly I was added as an authorized user. They said “no”. According to them, I was the only name on the account. How can I prove this delinquent credit card balance is not for my account if all they have to say is "yes it is?"
If you know for a fact that you did not open the account, you can file an Identity Theft Report with the police. I would also fill out the ID theft form located on the Federal Trade Commission’s website.Helpful 2
I have received one phone call and one letter from a debt collections agency. I responded within the 30 days to dispute the debt. Nothing is on my credit report and I have not heard anything else for 2 months. Is this normal?
Yes, that’s normal. Since debt collectors are not required to respond within a certain amount of time, they may take their time (if they intend to respond at all).
In regard to your credit report, not all creditors or debt collectors report to the credit reporting agencies. However, considering the debt is not currently being reported, the debt collector cannot report until it responds to you with validation.Helpful 1