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Archive for March, 2009

Debt Validation: FDCPA Rules

By Debt Prison on March 30, 2009

One of the most important sections of the Fair Debt Collection Practices Act is Section 809 Validation of debts. This Section lays down the guidelines for conduct pertaining to the debt validation process. Within 5 days from the first time a collection agency contacts you (phone or mail) you should write a Debt Validation Letter.

**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.

In their response to this letter, the collection agency is to provide you with the following:

* The amount of the debt.

* The name of the original creditor (Capital one, Bank of America, Discover, etc, etc..).

* Their response letter should state, that unless you dispute this validation within 30 days, that this debt will be considered valid and collection attempts will commence. It should also state that if the debtor does in fact dispute the debt, the collection agency will mail you a verification of the debt or a previous judgment from a civil court case.

* If the debtor disputes the debt, the collection agency must halt all collection attempts for 30 days until they can provide a mailed copy of the applicable information: 1. amount of debt and/or 2. original creditor’s name and address and/or 3. verification of debt and/or 4. civil court judgment.

Please understand that failure to ask the collection agency to validate the debt would not be used as an admission that you owe the money – if you later find yourself in civil court over the matter.

809. Validation of debts

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) 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 any 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. Collection activities and communications that do not otherwise violate this title may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.

(c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

(d) 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).

(e) The sending or delivery of any form or notice which does not relate to the collection of a debt and is expressly required by the Internal Revenue Code of 1986, title V of Gramm-Leach-Bliley Act, or any provision of Federal or State law relating to notice of data security breach or privacy, or any regulation prescribed under any such provision of law, shall not be treated as an initial communication in connection with debt collection for purposes of this section.

Discuss this article and meet new people at Debt Prison Forums.

Related Articles

* What is a Junk Debt Buyer?

* Restrictions on Wage Garnishment for Debt Collection.

* The Fair Debt Collection Practices Act

* Reasons not to file Bankruptcy or Settle Your Debts

* Can you go to jail for not paying your debts?

* How to settle your debts on your own

* How to deal with collection agencies

* Sample Debt Validation Letter

When will the Collection Agency sue you?

By Debt Prison on March 26, 2009

There’s no absolutes as to when a collection agency will sue you for debt owed. Today a friend of mine received a summons for a civil suit from a collection agency. This article is pretty much part two of this article which I wrote earlier on. He was trying to wait them out hoping they wouldn’t sue. This is the second friend I’ve seen sued over the years by collection agencies.

Here are the facts on the recent case.

He owed $5,000 to creditor on a high interest credit card.

He stopped paying the debt one year ago.

Received a collection letter from collection lawyer (debt ballooned to $6,000) in another state not licensed in Mississippi. I advised to ignore the letter since the collector couldn’t sue in MS court.

Debt was transferred to another collection agency in TN which has a lawyer on staff in MS. They mailed out a collection letter to my friend two months ago describing the debt in the amount of $6,200.

My friend ignored the letter and did not request validation of the debt.

Summons came yesterday for civil suit for debt.

It doesn’t always happen this way. And in the case of my friend he is an unlikely candidate for civil suit. He has no assets, is a student in college, and has a part time job. Even though it will take the creditor probably years to retrieve their money with a judgment, they still pursued the civil suit/judgment.

My other friend was sued under the same circumstances. He was a full-time student and had a part time job with no assets. However, some people go years without being sued.

So what makes a person more likely to be sued than another?

There really are no certain criteria for determining when and if a collection agency will sue you.

For some hints check out the following articles I’ve written on the subject:

How to avoid a lawsuit from a collection agency

The more money you owe the more likely you’ll be sued within 18 months or less.

If you move to another state and fail to update your information (by not registering to vote, getting a new Drivers License, or applying for new credit) you can make it difficult for the collection agency to locate you. If they can’t locate you before the Statute of Limitations has passed you should be in the clear.

If you have assets like a car or home and a decent job then you are a good candidate for a lawsuit. However, the lack of all of these items doesn’t necessarily mean they won’t sue. And the more debt you owe the more likely they’ll sue.

Don’t forget to mail out a Debt Validation Letter in response to each collection letter you receive.

I’m advising my friend to get a lawyer to represent him. This can prevent him from being abused by the collection agency by paying a bunch of phony charges. Often, without any assistance, you can end up paying much more than what you should.

** Remember, the best way to solve these problems is to pay the debt and get it out of your life.