Sunday, August 4, 2013

Ask Lee: Debt Validation Time Limit for Collection Agencies


I had 3 Collection agencies show up on my Credit Report showing collection accounts. I sent certified mail to them asking them to validate the debt & never heard back from them in the 30 days. On day 31 I sent another certified letter, with copies of my original letter as well as my return receipt from my original letter demanding they remove the trade lines in accordance with the FDCPA. I also sent copies of everything to all 3 credit bureaus explaining these companies did not respond in 30 days, provided the letters, certified receipts, etc, telling them it was their duty to remove these trade lines as the 3 companies didn't comply with the FDCPA. Is that all correct? I gave the collection agencies until 8/06/13 to remove the trade lines or I'd take legal action.Does this all sound like I've taken the correct steps? Thanks.



For starters, I need to clarify something: The 30 day restriction is on YOU, not the collection agency. You have 30 days after your initial contact with the collector to send in a validation request. The FDCPA does not set a timeline under which the collection agency must respond to you. Theoretically, the collection agency can wait a year to respond to your validation. The FDCPA does, however, prohibit the collector from conducting any further collection activity against you (excluding credit reporting) until it responds to your validation request. So after receiving your validation but prior to responding, the collection agency can not call you, send you dunning letters or fill up your e-mail inbox with angry payment demands. If they do, they are violating the FDCPA. They are not violating the FDCPA by not responding to your validation request within 30 days. You can review the section of the FDCPA that concerns validation here

The confusion over this issue often stems from the fact that, once you dispute the debt collector's tradeline with the credit bureaus, the collection agency has a time limit of 30 days to respond to the credit bureau's investigation or the credit bureaus will remove the tradeline. 

As far as the dispute goes, certified mail is good but make sure you always request a return receipt when mailing something to a collection agency. Many collection agencies, believe it or not, are ethical companies that operate within the law. Some, however, will just claim they never got your validation request. They can easily get away with this. If you have no proof you send the debt validation request, its your word against theirs. 

You have grounds to dispute an item with the credit bureaus if it isn't yours, you don't recognize it, etc. You don't have grounds to dispute a tradeline because the collector didn't provide you with a validation within 30 days because the collector isn't required to do so. I don't know how your dispute will go. It's possible that the credit bureaus will investigate the item anyway. I always recommend that consumers only dispute with the credit bureaus as a last resort. If the credit bureau "investigates" (and they don't conduct a genuine investigation. They basically do little more than ask the collection agency "Is this correct?") and sides with the collection agency, they can choose to ignore any further disputes you make--even if you have documentation that clearly illustrates that the collection account is an error. 

You have the right to take legal action against a collection agency for reporting incorrect information or violating the FDCPA in any way. Unfortunately, since failing to validate within a 30-day time limit isn't an FDCPA violation, you cannot sue under those grounds. If the accounts legitimately aren't yours, consider visiting with an attorney and mounting a lawsuit. In many cases--especially if the debt is small--a debt collector would much rather delete the tradeline than devote its time and resources to defending a lawsuit over a negligible amount. 

Best of luck,


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