How to Respond to a Debt Collection Letter and What to Include in a Debt Validation Letter

Updated on August 13, 2018
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Katie Wheat is a consumer who was sued by debt buyers and has been researching debt collection laws for over 10 years.

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 upon 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 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 Reply 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.

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.

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).




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.

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 for a lawsuit.

The FDCPA specifies that a request for validation must be sent within 30 days of an 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:

1692g(d):

(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 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).


Do not include threats in a validation request.

Do no 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 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.

Date

Your Name
Your Address

Debt Collector's Name
Address

RE: Account Number ________________

To Whom It May Concern:

I dispute the above-referenced debt and request validation.

Your Name

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 intial communication. The return receipt proves that the debt collector received your letter.

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    • profile imageAUTHOR

      Katie Wheat 

      2 weeks ago from South Carolina

      Hi WnLA,

      The part you cited is incorrect due to the fact that debt collectors are allowed to report collection accounts to credit reporting agencies.

      It states “if your offices have reported invalidated information to any of the 3 major Credit Bureau’s (Equifax, Experian or TransUnion)”.

      That part makes no sense because it”s included in the same letter in which the consumer is requesting validation. Since the consumer has not requested validation until that letter is sent, any information previously reported to the credit reporting agencies cannot be considered “invalidated”.

      “this action might constitute fraud under both Federal and State Laws.”

      Again, since the consumer is just now requesting validation there is no invalidated information being reported to the credit reporting agencies.

      “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”

      As I stated before, debt collectors are allowed to report accounts to the credit reporting agencies.

      Once a debt collector receives a TIMELY (sent within 30 days of the debt collector’s initial communication) dispute and request for validation, the debt collector cannot update any information it has reported until it validates the debt with the consumer. In addition, if the debt collector updates information with the credit reporting agencies after validating, it must include that the debt is disputed.

      In regard to filing a legal action for violation of the Fair Credit Reporting Act, in order for a consumer to have a private right of action under that Act, he must dispute information on his credit report with the credit reporting agencies. See 15 USC 1681s-2(b).

    • profile image

      WnLA 

      2 weeks ago

      I sent a letter to a debt collection agency that had a lot of the information you had in your article. I asked for what the money they say I owe is for, calculation, papers, etc.

      I found the letter on a number of websites and articles. That letter that they recommended also included this statement.

      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

      I included that in my letter. From what you say, that letter is probably not right. The collection agency is reporting the debt on my credit report. Is there anything I can do? Is the collection agency violating any laws?

    • profile imageAUTHOR

      Katie Wheat 

      3 weeks ago from South Carolina

      Hi IrishRedhead,

      One has to file suit for a violation of the FDCPA within one year of the violation. If the statute of limitations on the debt is up in less than a year, an attorney might recommend that you wait to file suit until the statute of limitations on the debt has expired. Otherwise, the debt collector could counter sue for the debt.

      If the statute of limitations does not expire for more than a year, an attorney might recommend filling suit and being prepared for them to offer a “mutual walk away”. In other words, they wouldnt sue for the debt in exchange for dismissal of your lawsuit. You could also negotiate the extinguishment of the debt and the deletion their entry on your credit report (if they are reporting).

      Try to talk to more than one attorney, if possible. Good luck!

    • profile image

      IrishRedhead 

      3 weeks ago

      Katie, thank you! I’ll try to find a lawyer today.

      The debt is still within the statute of limitations and it is for around $1200.00.

    • profile imageAUTHOR

      Katie Wheat 

      4 weeks ago from South Carolina

      Hi IrishRedhead,

      If your timeline is correct, I believe that CACH violated the FDCPA by overshadowing your right to request validation.

      Another word for "overshadow" is "contradict". In the first letter, it was stated that you had 30 days to dispute and request validation. The 2nd letter which you received during that 30 day period contradicted your right to request validation by including that payment was due upon receipt.

      Federal courts across this country have ruled that a debt collector cannot confuse a consumer and lead him to believe that he no longer has 30 days to dispute and request validation.

      I hope you saved the first letter. If it were me, I'd contact a consumer attorney in my area who is experienced in consumer protection statutes. You can contact your state bar association for a reference. You can go to www.consumeradvocates.org.

      If you don't mind, could you please tell me if the debt is still within the statute of limitations for collection in your state along with the amount of the debt?

    • profile image

      IrishRedhead 

      4 weeks ago

      Katie, 10 or 11 days ago, I got a letter from CACH,LLC for a credit card debt. It said I had 30 days to dispute and ask for verification. I haven’t sent a dispute letter yet.

      Today, I got another letter from the same debt collector collecting the same debt but it says the balance is due upon receipt.

      I thought I had 30 days to dispute and ask for validation. What’s going on?

    • profile imageAUTHOR

      Katie Wheat 

      4 weeks ago from South Carolina

      Hi GettingAhead2018,

      That information in the article you read is not accurate. The following is rather long but addresses your concerns.

      Accord and satisfaction applies to settlements between debtors and creditors (or collection agencies). A tax deduction is between the creditor and the government.

      Here's some court rulings. You can find similar rulings in all 50 states.

      Allen v. R.G. Indus. Supply (Ohio Supreme Court, 1993)

      "An accord is a contract between a debtor and a creditor in which the creditor's claim is settled in exchange for a sum of money other than that which is allegedly due. Satisfaction is the performance of that contract."

      Lazzarotti v. Juliano (Pennsylvania Supreme Court, 1983)

      "An accord and satisfaction is the result of an agreement between the parties which may be and usually does result from an implied agreement arising from the circumstances. If an agreement stems from a disputed claim, the acceptance of an amount less than the creditor claims to be due, when tendered by the debtor in full satisfaction of the creditor's claim, becomes a completed accord and satisfaction."

      Horizon Well Service, L.L.C. v. Pemco of New Mexico, L.L.C. (New Mexico Court of Appeals, 2015)

      "When considering the existence of an accord and satisfaction, we should examine the following elements: (1) [d]id the debtor make an offer in full satisfaction of the debt; [(2) w]as there an unliquidated or disputed claim which formed the basis of this offer; [(3) w]as this offer accompanied by acts and declarations which amounted to a condition; [(4) w]ere those acts and declarations such that the offeree was bound to understand them; and [(5) w]as the offer accepted in full satisfaction of the debt."

      MECO, Inc. v. Township of Freehold, NJ (Superior Court of New Jersey, Appellate Division, 2011)

      "The traditional elements of an accord and satisfaction are the following: (1) a dispute as to the amount of money owed; (2) a clear manifestation of intent by the debtor to the creditor that payment is in satisfaction of the disputed amount; (3) acceptance of satisfaction by the creditor."

      The above rulings show that "accord and satisfaction" occurs between a creditor and debtor. This defense would apply if you settled the debt with the creditor or collection agency before a lawsuit was filed. If that is the case, hopefully you have a written agreement with the credit card bank or a collection agency that proves that the debt was settled and paid.

      In regard to charged-off accounts and tax deductions, the following is from the United States 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.

      The following is from the United States Code of Laws.

      26 U.S.C. § 166(a)

      (a) General rule

      (2) Partially worthless debts

      When satisfied that a debt is recoverable only in part, the Secretary may allow such debt, in an amount not in excess of the part charged off within the taxable year, as a deduction.

      Note the phrase "recoverable only in part". Just as in the Code of Federal Regulations, that phrase shows that part of a bad debt is allowed to be recovered after it has been charged off.

      Here's an example:

      A credit card company charges off a credit balance of $1000.00 and takes a tax deduction for that amount. The next year, the credit card company sells the debt to a debt buyer for $50.00. That $50.00 becomes a profit for the credit card company, and it must claim that profit on its taxes.

      Now, for some court rulings:

      "In the event that a taxpayer unexpectedly recovers part of a debt that was deducted as worthless in a prior tax year, the taxpayer must report these funds as income in the years in which the unexpected recoveries occurred." See 26 U.S.C. § 111. Estate of Mann, 731 F.2d 267, 277 (5th Cir.1984).

      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).

      The Michigan noted that Chase and WFNB sold accounts AND were allowed to receive a bad debt tax deduction.

      In Stratton v. Portfolio Recovery Associates, the 6th Circuit Court of Appeals noted that GE Money Bank sold a bad debt to Portfolio Recovery Associates. Here is a quote from the court in that ruling:

      By charging off the debt and ceasing to charge interest on it, GE could take a bad-debt tax deduction, I.R.C. § 166(a)(2). A little more than a year later, in an increasingly common practice, GE assigned its interest in Stratton's charged-off debt to PRA. Stratton v. Portfolio Recovery Associates, LLC, 770 F.3d 443, 448-49 (6th Cir. 2014).

      The 6th Circuit did NOT rule that a bank which charges off a debt and receives a tax cannot then sell the debt to a debt buyer.

      From Haney v. Portfolio Recovery, 8th Circuit Court of Appeals.

      "See, e.g., McDonald v. Asset Acceptance LLC, No. 2:11-cv-13080, 296 F.R.D. 513, 525 (E.D. Mich. Aug. 7, 2013) ('Instead of amassing interest on a worthless account, [the creditors] sought to sell the accounts and shift the risk of nonpayment to a third party for a nominal fee. This practice also permitted [the creditors] to remove the account from the financial records and receive a bad debt tax deduction.' (citing I.R.C. § 166(a)(2))); see also 26 C.F.R. § 1.166-3(a)(2)(i) ('[T]he amount which has become worthless shall be allowed as a deduction under section 166(a)(2) but only to the extent charged off during the taxable year.'). Upon sale of a completely charged-off account, the creditor's basis likely will have been adjusted to zero, and the entire proceeds of the sale must recognized as income. Haney v. Portfolio Recovery Associates L.L.C., 837 F.3d 918 (8th Cir. 2016)."

      Both the courts and federal regulations show that a bank can receive a tax deduction for a charged-off debt and still recover part or all of that debt at a later date. Banks receive a partial recovery when they settle or sell debts.

      In regard to insurance claims, there is no evidence that credit card companies file insurance claims for defaulted credit card accounts. There are NO court rulings to support such a claim. If the claim were valid, well-known consumer defense attorneys would raise it as a defense for their consumer clients but it does not appear they do so.

    • profile image

      GettingAhead2018 

      4 weeks ago

      Katie, I have another question. I read in another article that a creditor who has taken a tax deduction or insurance claim can't sell a debt or sue you for it because that is accord and satisfaction.

      I found out that the debt collector who sent me a letter is a junk debt buyer. How could the creditor sell the debt when it charged off the account and got a tax deduction or an insurance payment

    • profile imageAUTHOR

      Katie Wheat 

      5 weeks ago from South Carolina

      Hi ReneeSB,

      I’m glad you’re pleased with the outcome and, yes, it’s a relief when it’s finally over.

      Paying a charged-off debt does not reset the 7-year credit reporting period. That time limit is based upon the date of first delinquency or the date of charge off reported by the original creditor. See 15 U.S.C. § 1681c(a)(4).

      Any payment made after charge-off cannot change those dates. So rest assured that your payment did not cause the account to be reported for another 7 years.

    • profile image

      ReneeSB 

      5 weeks ago

      Katie, I hired the lawyer I told you about a few weeks ago. He helped me settle the lawsuit with Discover. I was able to pay it with some money I had saved and some that I borrowed from a family member. I think the settlement was good so I am relieved this is over.

      The settlement agreement says that it will be reported on my credit report that the debt is settled. I read somewhere that paying a debt can cause it to be reported for another 7 years. Is that true?

    • profile image

      GettingAhead2018 

      6 weeks ago

      That makes sense. Thanks.

    • profile imageAUTHOR

      Katie Wheat 

      6 weeks ago from South Carolina

      Hi Egg Foo Young,

      In your comment, you included a link to an article that you claim is "better".

      Please note that my article is based upon 1692g of the FDCPA. Could you please respond and tell me what is better about the validation letter in the article you cited?

    • profile imageAUTHOR

      Katie Wheat 

      6 weeks ago from South Carolina

      Hi MillyAnn,

      I'm still waiting for you to respond and inform me as which part of my advice was "horrible". If I've made a mistake, I want to know about it so I can correct it.

    • profile imageAUTHOR

      Katie Wheat 

      6 weeks ago from South Carolina

      Hi GettingAhead2018,

      Thank you for your question. I can understand how it might be confusing. If you read 1692g(a) in my article, you'll notice that it only references the debt. It makes no reference to the status of the debt collector. Here are the reasons a collection agency doesn't have to prove licensure when responding to a request for validation.

      1. A license to collect has nothing to do with the debt. It has nothing to do with whether or not a debt exists and if the demanded amount is correct.

      2. It has nothing to do with whether or not the correct consumer has been contacted about the debt. Read the case law I cited regarding validation.

      3. The FDCPA is a federal law that applies to all 50 states. Licensure is a state issue. Not all states require collection agencies to be licensed. Therefore, the FDCPA cannot require proof of a license to validate a debt in a state where a license not required.

      If a collection agency is required to be licensed in your state in order to attempt to collect a debt, the lack of a license might violate another part of the FDCPA, but it does not violate 1692g.

    • profile imageAUTHOR

      Katie Wheat 

      6 weeks ago from South Carolina

      Hi TRVLR,

      Keep an eye on the account on your credit report that has not yet been sold. The creditor may keep it or may sell it at a later date.

      I'm sorry, but there's no way to determine whether or not you'll be sued. What I would suggest is that you start researching and learning just in case you are eventually sued.

      Study your county courts' rules of civil procedure. Those rules will tell you what the other party must include in its complaint and if any documentation should be attached. You can also find forms to fill out for an answer to the complaint.

      You didn't reveal the names of the original creditors, and I'm not asking you to do so. Many credit card agreements contain an arbitration provision. Capital One and Bank of America are the exceptions. Those banks removed their arbitration provisions back in 2009 or 2010.

      Anyway, in the event you might be sued by a debt buyer, arbitration is a great option (except for the 2 previously mentioned banks). Debt buyers do not like arbitration when they are the plaintiffs and the only issue is whether or not the consumer owes the debt. The vast majority of the time, the arbitration fees are greater than the amount of the debt. As a result, debt buyers will usually dismiss the lawsuit.

      You can go to the Consumer Financial Protection Bureau's credit card database and locate the agreements that were in effect the year you defaulted on the accounts.

      Next, I would google "motion to compel arbitration" and "credit card". You'll find some helpful forums that have members across the country who can help you. They can explain a "motion to compel arbitration" and will help you locate applicable court precedent from your state to include in your motion.

      If you're sued, please consult an attorney. It doesn't matter if the plaintiff is an original creditor or a debt buyer. However, it's even more important if your sued by the original creditor. The reason is because it's easier for original creditors to prove their claims.

      I would also suggest that you go to Google Scholar and read court rulings from your state court just in case arbitration might not be an option. Some search terms might be "credit card", "account stated", and "breach of contract". If your state doesn't have any rulings regarding credit cards, you can still read rulings about "account stated" and "breach of contract" because those are the most common causes of action for credit card debt. Those rulings would inform you as to what your court requires to prove those claims.

      I know this seems like alot, but I believe that research and preparation empower us. Hopefully, you won't be sued. But If you are, you'll feel much better prepared and able to defend yourself if you start researching and studying now.

    • profile image

      GettingAhead2018 

      6 weeks ago

      Hi. I saw where you wrote that collection agencies don't have to prove they are licensed to collect a debt when you send a validation request.

      I asked for validation when I got a letter from a collection agency. That letter had the notice about disputing and 30 days, so I mailed my request within 30 days. Where I live, a collection agency has to be licensed so why wouldn't they have to prove it if they answer my letter?

    • profile image

      TRVLR 

      6 weeks ago

      Thanks again. One of the accounts on my report looks like it has been sold. The original creditor shows sold and transferred in it. In one of your other articles you say that when a creditor sells an account, the credit report has to show that balance owed to the bank is 0. This one shows a 0 balance.

      The original creditor on the other one doesn't show anything like that and it still shows I owe a balance so I guess it has not been sold.

      Do you think I'll be sued?

    • profile imageAUTHOR

      Katie Wheat 

      6 weeks ago from South Carolina

      Hi TRVLR,

      At least Midland is reporting that the debt is disputed. That's good.

      You could send validation requests to the debt collectors, but they won't have to respond because the FDCPA specifies that an initial communication must be WITH a consumer. Courts that have ruled on the issue have ruled that finding a debt collector's entry on one's credit report is not considered an initial communication that triggers validation rights under the FDCPA because it's not a communication with the consumer.

      Just a couple of those rulings for you.

      Pretlow v. AFNI, Inc. WD Virginia, 2008

      "Plaintiffs have not alleged that they received any communications from Defendant which would form the basis of a debt validation claim. Their claim is based, rather, on communications between Defendant and certain credit reporting agencies. Section 1692g is therefore inapplicable on the facts pled."

      Robinson v. TSYS Total Debt Management, Inc. Dist. Court, D. Maryland, 2006

      "The above allegations identify two candidates for the 'initial communication' that is required to trigger 15 U.S.C. § 1692g.[6] The first candidate—'when Defendant communicated the debt to Plaintiffs credit report'—cannot support a claim under the FDCPA because it is not a communication with a consumer. See 15 U.S.C. § 1692g(a) (identifying 'initial communication" as "with a consumer in connection with the collection of any debt')."

      Are the original creditors still reporting those debts? If they are, do they show the accounts as "sold" or "transferred to another lender" or "purchased by another lender"? Something like that.

      When an account has been sold, the original creditor, if it is reporting the debt, must reflect that fact on your credit report by showing one of the previously mentioned terms (or something similar). If the entry doesn't reflect language that indicates an account has been sold, then the account is still owned by that original creditor.

    • profile image

      TRVLR 

      6 weeks ago

      Ok, thanks. Yes the debt is still within the statute of limitations. In my state it’s 6 years and I stopped paying about 3 years ago. Midland is reporting that the debt is disputed.

      Here’s my next question. A couple of other debt collectors are reporting on my credit report for 2 other debts. Should I send a validation letter to them?

    • profile imageAUTHOR

      Katie Wheat 

      7 weeks ago from South Carolina

      Hi TRVLR,

      No, the debt collector did not have to respond to your request. However, since you did dispute the debt, Midland should note that dispute in its entry on your credit report IF Midland is reporting.

      No, I can't imagine that you did any damage by sending that letter. At most, you merely caused the debt collector to smile and shake his head because he or she has seen that same letter over and over again. Even if you sent the letter within 30 days of the initial communication, the debt collector would know that what is requested is not required to validate a debt.

      The letter you sent has been floating around on the internet for years. There's no telling how many unwitting consumers have copied and sent it in the belief that it's valid. Who knows how many times collectors at Midland have seen that same letter.

      I have no doubt that the proponents of that letter want to help consumers but don't realize that they're misleading consumers. Considering that laws and court rulings are readily available both on the internet and in law libraries, it doesn't take much effort to do some research in order to confirm that no court has ruled that the information requested in that letter is required to validate a debt.

      I don't know why those who tout that letter don't do the research. Perhaps they just don't know any better or don't know how to research. There are those who might be too lazy to research. Then some are so convinced of their own superiority that they may not believe in the importance of court opinions. Who knows?

      In any case, you can be sure that I will back up anything I claim. If I can't back it up, I will let you know that it's only my opinion.

      I want to give accurate facts supported by law. I also want consumers to learn how to do their own research so that they don't have to rely on information they find on the internet that may or may not be supported by law.

      Question: Is the debt still within the statute of limitations for collection in your state?

    • profile image

      TRVLR 

      7 weeks ago

      Thanks. I sent Midland a letter asking for validation. It was a letter I found online and was like you described. I asked for what the money they say I owe is for, a calculation, to show me they are licensed, and so on.

      I didn't send my letter within 30 days after I got the collection letter. From what you say they don't have to answer my request.

      My first question is if I did any damage by sending that letter and asking for things they don't have to send me?

    • profile imageAUTHOR

      Katie Wheat 

      7 weeks ago from South Carolina

      TRVLR,

      Midland Credit Management is the collection arm of Midland Funding (a debt buyer).

      Yes, you can ask your questions separately. Let's deal with one issue at a time.

    • profile image

      TRVLR 

      7 weeks ago

      Back in January I got a debt collection letter from a company I have never heard of. It’s called Midland Credit Management. The letter is about a credit card I had. I read different information from different sources so I’m kind of confused. You have information from courts so that’s why I will ask you some questions.

      I have several questions. Can I ask them separately and wait for your answer or do you want me to ask them all at once?

    • profile imageAUTHOR

      Katie Wheat 

      7 weeks ago from South Carolina

      Hi ERT1992,

      The FDCPA is a federal law, so we refer to federal court rulings. Illinois is in the 7th Circuit.

      Here's a recent ruling from the 7th Circuit Court of Appeals.

      Walton v. EOS CCA (7th Circuit Court of Appeals, 2018)

      "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.'" 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).

      Based on the above, as long as your name and address were correct on the statements, the debt was verified.

    • profile image

      ERT1992 

      7 weeks ago

      Thanks. I live in Illinois. It’s a credit card debt. One of the statements showed charges and a payment. Another statement showed the last payment I made. The last statement showed the charge off.

      Yes the balance on the statement that showed the charge off is the same balance in the collection letter.

    • profile imageAUTHOR

      Katie Wheat 

      7 weeks ago from South Carolina

      Hi ERT1992,

      Thanks for your questions.

      No, Portfolio Recovery did not have to send a response to your request for validation within a specific time period. As you can read in my article, the FDCPA does not give a time limit for debt collectors to respond to validation requests.

      In answer to whether or not validation was provided depends upon the circumstances.

      1. What is the nature of the debt? Is it a credit card debt?

      2. Did the 6 credit card statements show any charges and/or payments?

      3. Does the balance demanded by Portfolio match the balance on one those 6 statements?

      4. If you don't mind revealing it, in which state are you located?

      I ask about your resident state because some sites and articles offer "one size fits all" advice. That type of advice is always risky.

      I will offer suggestions based upon your circumstances, location, and rulings by courts that could affect an outcome.

    • profile image

      ERT1992 

      7 weeks ago

      Thanks for the info. I sent a request for validation to Portfolio Recovery. It was within 30 days after I got the first letter just like you said in your information.

      Three months later they sent me 6 credit card statements. They didn't have to send them sooner? Is that validation?

    • profile imageAUTHOR

      Katie Wheat 

      2 months ago from South Carolina

      Hi ReneeSB,

      The attorney has confirmed that you're being sued by the original creditor.

      I don't know in which state you're located. If I were located in a state in which my wages could be garnished and/or I had property upon which a creditor could place a judgment lien, I'd hire an attorney if possible. If I could not afford an attorney, I'd at least follow the advice he provides in the consultation.

      Unlike those who write articles that offer "advice" and "defenses" that are not supported by law, a consumer attorney will know whether or not you have valid defenses against a lawsuit brought by an original creditor. The "one size fits all advice" offered by some is dangerous.

      The point is that you don't want to take chances with your income and property. Do what you feel is best for you.

    • profile image

      ReneeSB 

      2 months ago

      I looked up my credit report. It did not show that Discover sold or transferred the debt.

      I called a lawyer who helps consumers and met with him on Friday. He said that it is too late to send a request for validation. He also said that Discover really is suing me.

      I am trying to decide if I should hire him. His fee is alot less than what I'm being sued for.

    • profile imageAUTHOR

      Katie Wheat 

      2 months ago from South Carolina

      Simply because you prefer the information in article you’ve cited does not mean the information is accurate. The suggested validation request letter in that article is not supported by the FDCPA or the courts.

      The information in my article is not based on my opinion. As you can read, I provide both the actual language of the FDCPA along with court rulings to support my claims.

    • profile image

      Egg Foo Young 

      2 months ago

    • profile imageAUTHOR

      Katie Wheat 

      2 months ago from South Carolina

      Which part?

    • profile image

      MillyAnn 

      2 months ago

      This is horrible advice.

    • profile imageAUTHOR

      Katie Wheat 

      2 months ago from South Carolina

      Hi ReneeSB,

      It's true that a summons and complaint is not an initial communication.

      You can send a request for validation to the attorney, but he doesn't have to respond to it. However, since you're being sued, you need to answer the complaint and then request discovery. Read your court rules to see if discovery is allowed, if you need permission from the court, etc.

      By the way, some people may tell you that you're not really being sued by Discover. They may say that the account is owned by a junk debt buyer who s trying to trick you by naming Discover as the plaintiff.

      Check your credit report. If the account has been sold to a debt buyer, Discover's entry will show "sold" or "transferred". If one of those words does not appear, then Discover still owns the account, and you should consult an attorney.

      In the event that Discover still owns the account, be careful of those who will say that a debt buyer is trying to trick you. Since Discover is named as the plaintiff, the court will accept that as the truth. If you spend your time trying to prove that a debt buyer owns the account, you will lose and have a judgment against you.

      Go to the top of this page and click on my profile. You'll see the other articles I've written. Perhaps one or both of them will help you.

    • profile image

      ReneeSB 

      2 months ago

      I got a summons and complaint from Discover Bank. Your article says that a summons and complaint is not an initial communication. Does that mean I can't send a request for validation?

    • profile imageAUTHOR

      Katie Wheat 

      2 months ago from South Carolina

      Jackie2019,

      If the information was sent directly to you, no privacy laws were violated. In addition, from what I understand, there is no private right of action under HIPAA.

      I would contact the medical provider. It’s possible that the collection agency was collecting for the provider and did not purchase a debt.

      An excellent source for more information on HIPAA is https://www.creditinfocenter.com/community/.

    • profile image

      Jackie2019 

      2 months ago

      Katie, I greatly appreciate your research on this issue. I had a 249$ collection and disputed. I am a member of Credit secrets on facebook and one of the nice ladies pointed me to your article thankfully. I received from these collectors that bought the debt I assume ; a letter that was about 10 pages long. It had my drivers license on it, my signature and all the medical information the clinic had on me. Is this a violation of Hippa? Thank you for your time.

    • profile imageAUTHOR

      Katie Wheat 

      3 months ago from South Carolina

      Charandkids,

      Have you answered the complaint yet?

      Once you've been sued, it's too late to request validation. As you can read in my article, a validation request must be sent within 30 days of the initial communication. The FDCPA states that a summons and complaint is not an initial communication.

      Also, despite what others may say, debt collectors do not have to provide much documentation to validate a debt. For instance, they don't have to provide a copy of a contract or a complete accounting of a debt. In my article, I've included rulings from Courts of Appeals that show very little is required for validation.

      You can get more information and documentation from discovery. Whether or not you can request discovery depends upon your court. If you are in magistrate court, read your rules.

      Some magistrate courts require permission from the court to request discovery.

      Again, read your court's rules.

    • profile imageAUTHOR

      Katie Wheat 

      3 months ago from South Carolina

      Charandkids,

      Who is named as the plaintiff?

    • profile image

      charandkids 

      3 months ago

      I recieved a court summons to respond as I'm being sued by collection agency. Do I have any standing grounds to request from collection agency how they claim I owe them vs. Credit card? Should I respond to summons with request for court hearing, disputing claim of debt owed or claim not disputed/pymt of claim? Thank you for your input on this. I understand your not a lawyer. Char

    • profile imageAUTHOR

      Katie Wheat 

      4 months ago from South Carolina

      You're welcome.

    • profile image

      David W Strausser 

      4 months ago

      Thanks

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