Debt Validation

The Fair Debt Collection Practices Act (“FDCPA”) was not implemented to protect consumers from the collection practices of original creditors as defined under § 803(4). This definition does not include any person who is assigned or buys a debt. Rather, this act was designed to protect the consumer from the practices of debt collectors as defined under § 803(6). Under this definition a debt collector is any person who collects or attempts to collect debts originally owed to another. 

When a debt collector contacts a consumer and attempts to collect on a debt, the consumer may not know the debt collector or the debt they are trying to collect. In fact, this may even be a part of the deception a debt collector uses. Additionally, while the consumer may agree that they owe the debt they may dispute the amount owed. 

In order to verify that the debt collector has the right to collect on the debt, the consumer can require the debt be validated under § 809. Debt validation gives consumers the ability to confirm whether the debt collector has the authority to collect the debt and the amount of the debt owed. If the amount of the debt is disputed, debt validation can be used to determine why the debt collector is trying to collect that amount. 

How Do You Know the Debt Collector is Entitled to Collect the Debt?

Under § 809(a) of the FDCPA a debt collector must send to the consumer, within five days of the initial communication, a written notice that contains:

• The amount of the debt;
• The creditor’s name;
• A statement that the debt will be considered valid unless the consumer disputes the debt within thirty days;
• A statement that notifies the consumer that if they dispute the debt in whole or in part within thirty day, the debt collector will obtain proof of the debt or judgment and mail the proof to the consumer; and
• A statement that the debt collector will provide, on the written request of the consumer within a thirty day period, the name and address of the original creditor

In addition to requiring proof that the collection agency has authority to collect on the debt, consumers can also require that the debt collectors communicate information about the amount of the debt, such as how the original debt amount, the calculation of interest, and any penalties. This was established in the case Fields v. Wilber Law Firm. Consumers can also requirea copy of the original signed loan agreement or credit card application. This requirement can be satisfied with account statements from the original creditor. 

If the consumer fails to dispute the debt’s validity then that failure is considered an admission of the liability under § 809(c). On the other hand, under § 809(b), if the consumer disputes the debt in whole or part in writing within thirty days, or requests the information on the original creditor, the debt collector must stop collection of the debt or, if only a portion is disputed, the disputed portion of the debt, until proof of the debt or judgment or the original creditor’s information is mailed to the consumer. 

Was the Debt Assigned or Sold?

Whether the debt was assigned or sold can also impact whether the debt collector has authority to collect on the debt. It used to be the case that debts were assigned more often than they were sold. However, the current trend is that original creditors are more likely to sell debts. When a debt is assigned, the collection agency is hired by the original creditor to collect the debt and the collection agency is paid for its services with a percentage of the amount of debt collected. 

Unless stated in the contract, if the debt is assigned the consumer does not technically owe the collection agency any money because the collection agency does not have proof that they own the debt. The original creditor continues to own the debt. However, even though the collection agency is acting from the original creditor, they are still governed by the FDCPA.

Collection agencies are now more likely to purchase the debt for a very low amount and then try to collect.If a collection agency purchases a debt they must validate the debt under § 809. If they cannot they are not allowed to: 

• Collect the debt;
• Contact the consumer about the debt; and
• Report the debt

Since this is the case validation can be a very strong consumer tool. At the very least it can buy some time for the consumer while they wait for the collection agency to validate the loan. Then if the collection agency cannot validate the loan the agency cannot collect on the debt.

If it was not evident already, claims under the FDCPA are quite complicated and require an experienced and resourceful FDCPA attorney to represent you with your claim against aggressive debt collectors. These debt collectors use their experience to exploit loopholes in the law against you. Here at Krohn and Moss, we have been representing clients throughout the United States since 1995 and understand the deceitful tricks used by debt collectors. We have an intimate understanding of the law and compassionately represent our clients to protect their interests. 

If you or a loved one believes to be a victim of malicious and wrongful conduct under the FDCPA, please contact us immediately. Call us toll free at 1-800-875-3666 or visit our website for a FREE case review and evaluation at http://www.krohnandmoss.com.