Wednesday, October 8, 2014

Can a Debt Collector Refuse to Respond to a Debt Validation Letter?

If you're one of the many people who have received calls and letters from collectors regarding debts you weren't even aware existed, sending the collection agency a debt validation letter is one way to ensure the debt is yours before you pay it.

What many debtors don't realize is that, while federal law gives you the right to request debt validation, it doesn't require the collection agency to actually provide it. It merely prohibits the debt collector from continuing with any collection activity (except credit reporting) until it validates your debt. There are some situations, however, in which a collectors will ignore your debt validation request altogether.

1. The Validation Period Has Expired

A debt collector has all the time in the world to respond to your debt validation request, but you have a limited amount of time to send one. The Fair Debt Collection Practices Act notes that after its initial contact with you, a debt collector must send you a written statement notifying you that you have 30 days to send a validation letter.

You have 30 days to demand validation--don't squander it!

That doesn't mean that you can't request validation after the initial 30-day period expires: you can. After all, not everyone receives the collection agency's initial notification letter. Technically, the 30-day validation period begins when you first become aware of the debt. Proving that you weren't aware of the debt's existence, however, can be tough--especially if the collection agency is claiming it send you the required notification. So if the 30-day period has expired--regardless of the circumstances--the debt collector may use this as an excuse to ignore your debt validation request.

2. The Debt Collector Isn't a Third Party Collection Agency

The federal laws in the FDCPA that give you the right to demand validation only apply to third-party collectors. A third party creditor is any company that buys a debt from the debt's original creditor in order to collect it and make a profit. Collection agencies that recover debts on a contingency are also third-party creditors--even though they don't actually own the debt.

Some collection agencies, however, are owned by the debt's original creditor. Certain large credit card companies, for example, have a collections department owned and run by the original creditor itself. These "in-house" collection agencies aren't considered third party creditors and the FDCPA's collection laws do not apply to them. Thus, don't be surprised if they ignore your debt validation request.

3. The Collection Agency "Didn't Receive" Your Request for Validation 

Never send validation letters via regular mail.
If you send a debt validation letter but the collection agency never actually receives it, how will they know you even sent one? They won't. And then the validation period will expire and poof! The collector can now safely ignore any and all of your validation requests.

Of course, the odds of your letter getting lost in the mail are small. If you don't send it certified mail, return receipt requested, however, it doesn't create a paper trail. There's no proof that the collection agency received it and it may mysteriously vanish. Don't make this mistake. Send all communication with debt collectors via CRRR. Always.

4. Blatant Breaking of the Law

I almost hate to include this one because today so many collection agencies are mom and pop outfits that do their very best to uphold the letter of the law. Unfortunately, the following scenario does still occur and should be addressed.

Debt collectors (just like you hard-working folks) love loopholes. In the absence of loopholes, however, some collection agencies--mostly junk debt buyers--have been known to blatantly break the law. Because there is no time frame to adhere to, ignoring your debt validation letter isn't illegal--but, if you send your letter during the 30-day validation period, refusing to validate and continuing to conduct collection activity is.

Note: The one exception to this rule is credit reporting. A collection agency may report or update previous reports with the credit bureaus regardless of whether or not it has responded to your request for validation.

Why would a debt collector leave itself open for a lawsuit? It's playing the odds. Debt collectors know that filing a lawsuit without legal assistance is daunting for most people. If these debtors could afford an attorney, they likely would have paid their debts. In addition, few debtors truly understand their rights well enough to defend those rights in court without help.

Even if a small handful of debtors' sue and win, collection lawsuit awards are tightly regulated. In most cases, consumers can't expect to win more than $1000 per infraction (there are exceptions, but not many). If this gamble--even though its against the law--brings in more money than it costs, some collectors won't hesitate to take that risk.

5. Collection Agency Can't Validate--So It Doesn't

Debt collectors often buy debts in bulk. While this lets them pick up accounts on the cheap, it has its drawbacks. One common problem is that they may get very little information about the debt other than the debtor's name and how much he/she owes. They'll still pursue it, of course, but clearly aren't able to validate it.

The right thing to do for a collector that cannot adequately validate your debt is to cease all collection activity and "drop" the debt. They aren't supposed to sell it pending a validation, but many do so anyway.

Collectors rarely "drop" debts because there are no federal guidelines that establish what does and does not constitute legitimate validation. For this reason, a collection agency can send you a simple printout of how much you supposedly owe, call it validation and resume collection activity.

6. They Already Have a Judgment

If the collection agency has already sued you, won, and has a judgment against you, you can probably
Court judgment=validation not necessary
forget all about having your debt validated. They may send you a record of the judgment and they may not. Either way, a court of law has already deemed your debt legitimate and granted the debt collector the right to recover it. It's a fair bet that the collection agency will refuse to respond to any debt validation letter you send post-judgment. Any objections that arise at this point must be addressed by a court.

Related Posts:

Debt Validation After 30 Days

Does Requesting Debt Validation Restart the Statute of Limitations?

What To Do When a Collection Agency Validates Your Debt