How to request validation of a debt

The Fair Debt Collection Practices Act (FDCPA) gives consumers the right to request validation of a debt. Under the FDCPA, a debt collector must send you a written notice within 5 days of their first communication with you. The notice must tell you, among other things, about your right to request validation of the debt. In my experience, consumers should almost always request validation of the debt, particularly if a debt buyer is involved, because the more information you have, the better.  But here are a couple things to keep in mind about the validation process:

• You must request validation in writing and you must request it within 30 days of your receipt of the required notice. Under the FDCPA, a debt collector doesn't have to honor a request for validation unless it's in writing and unless they receive it within 30 days of your receipt of the notice. As a practical matter, many debt collectors will honor a verbal request for validation and some will even honor a request made after the 30 days. But if you want to protect your right to have your debt validated, you must do it in writing and within 30 days. I recommend sending the letter via certified mail so that you can prove that they received it and when they received it.

• Once you've properly requested validation, the debt collector must cease all collection attempts until they provide it to you. There are some websites that claim that a debt collector must validate a debt within 30 days and if they don't the debt is forgiven. This is simply not true. There is no time limit to how long the debt collector has to validate your debt. They just can't call you, write you, sue you, or take any other action until they validate. If they do, they've violated the FDCPA.

• A debt collector can't use your failure to request validation of a debt against you. The FDCPA prevents collectors from using your failure to request validation as evidence that you owe the debt.

• There aren't any clear requirements about what type of documents are sufficient validation. The FDCPA doesn't define validation, and the FTC has said that validation only needs to confirm that the debt collector is pursuing the right person and the right amount.

• Collection activity during the 30 day validation period can't "overshadow" your right to request validation. This can be a little tricky, but here's an example: let's say you receive the validation notice on March 1 and then they serve you with a lawsuit on March 5. Under the FDCPA, you have 30 days--or until March 31--to request validation. And in Minnesota you have 20 days--or until March 26--to respond to a lawsuit. So because you have to answer the lawsuit before your time to request validation is up, the lawsuit "overshadows" your right to request validation. This is a violation of the FDCPA.

What is debt collection harassment?

Although it sounds like an easy question, there has been a lot of litigation over what exactly is considered debt collection harassment under the Fair Debt Collection Practices Act. It's often a question that turns on the unique facts and circumstances of each individual case. But based on the text of the FDCPA itself and the related court decisions, it can be said with some certainty that the following tactics are collection harassment:

• Debt collectors cannot threaten violence to collect a debt. This one is pretty common-sense. This prohibition also covers threats against your children, friends, and other third parties.

• Bill collectors can't use profane or abusive language. Obviously different people have different definitions of "profane or abusive". But at least one court has ruled that name calling and racial or ethnic slurs are profane and abusive.

• Collectors can't call you repeatedly. This not only applies to actual telephone conversations, but also to causing the phone to ring. For example, redialing your number after you've hung up the phone.

• Debt collectors must tell you who is calling. In virtually every communication, the debt collector must identify himself and notify you that he is a debt collector. But there is some debate about whether collectors can use a consistent alias. Not surprisingly, many collectors would rather not use their real name when on the job. So some courts have allowed the use of aliases.

• Any other debt collection conduct where the "natural consequence" is to harass, oppress, or abuse. This is the catch-all provision. Again, it can be tough to define what conduct has the natural consequence to harass, oppress, or abuse. In some cases, it's easy. In other cases, it's more difficult. Courts have said that mere "bad manners" is not harassment. But the use of words like "liar", "deadbeat", or "crook" probably cross the line and would be considered harassment.

Debt collectors can't threaten to sue you unless they really mean it

The Fair Debt Collection Practices Act (FDCPA) prohibits a debt collector from threatening to do something that they don't really intend to do. The most common violation of this part of the FDCPA is when a debt collector threatens you with a lawsuit if you don't agree to pay the debt. This FDCPA violation requires two things: (1) that the debt collector threatened to sue you; and (2) that they didn't really mean it. So how do you know whether the debt collector is lying when they threaten legal action? Here are a couple of indications:

• the amount of the debt is small;

• the debt collector does not have an office in your state;

• the debt collector does not have a licensed attorney in your state;

• the collector threatened a lawsuit and months or even years went by before they sued you.

There are other indications as well, but its tough to know whether they apply before bringing a FDCPA lawsuit. For example, the debt collector may not have the creditor's authorization to sue you, but there's really no way to know that until you get into litigation and can use discovery to figure it out.

This part of the FDCPA probably also applies to many veiled or implied threats of a lawsuit. For example, courts have found FDCPA violations from the following statements:

• The collector "can" or "may" sue

• The debt would be referred to a lawyer "for collection action"

• The collector is authorized to proceed with legal action

Does the FDCPA apply to my situation?

It is an unfortunate and little-known fact that the Fair Debt Collection Practices Act (FDCPA) does not apply to every debt collection situation. Two requirements must be met before the FDCPA comes into play.

First, the debt that is involved must be a "consumer debt". The FDCPA defines "consumer debt" as any debt where the money was used to buy goods or services that were "primarily for personal, family, or household purposes." What does this mean in English? It means that business debts are not covered by the FDCPA. Only debts incurred to buy goods or services for use by you, your family, or in your house.

Second, there must be a "debt collector" involved. Under the FDCPA, "debt collector" is a term of art that means a business that collects the debts of another. This means that the original lender or creditor is not covered by the FDCPA. So if you had a Capital One credit card and the Capital One collection department is calling you, they are not required to follow the FDCPA. But if ABC collection agency is collecting on behalf of Capital One, the FDCPA applies to them. Law firms are also covered by the FDCPA if they regularly collect consumer debts. So the FDCPA definitely applies to a collection law firm, but probably doesn't apply to a law firm that only occasionally handles consumer collection cases.

Of course, even if your situation involves a consumer debt and a debt collector, there must still be a violation of the FDCPA.

Debt collectors cannot violate one part of the FDCPA in an attempt to comply with another

The Fair Debt Collection Practices Act (FDCPA) requires that every voice message left by a debt collector tell you that the communication is from a debt collector. The FDCPA also prohibits debt collectors from telling third parties that you owe a debt. This can create a problem for debt collectors that leave voice messages. On the one hand, the debt collector must disclose that the communication is from a debt collector in the message. But on the other hand, disclosing that the communication is from a debt collector may violate the FDCPA's prohibition of telling third parties about a debt. Debt collectors often whine about this conundrum.

The recent case of Edwards v. Niagra Credit Solutions, Inc. involved this exact scenario. The debt collector, apparently as a policy, did not disclose that the call was from a debt collector in voice messages. When it was sued under the FDCPA, the debt collector complained that if it left the required notice, it risked violating the part of the FDCPA that prohibits disclosing that a consumer owes a debt to a third party. The judge brushed aside the debt collector's complaint of being in an impossible position by pointing out that the FDCPA "does not guarantee a debt collector the right to leave answering machine messages" and held that it is not legal to violate one part of the FDCPA in an attempt to comply with another part.

What is an Order for Disclosure?

When a creditor obtains a judgment in Minnesota, they can request that the court send you a form called an Order for Disclosure or OFD. The form asks you where you work, how much you make, where you bank, and other questions about your assets. The purpose is to allow the creditor to discover what assets you have that may allow you to pay the judgment.

But here is the critical part:  you MUST fill out the OFD and return it to the creditor within 10 days. If you don't, then the creditor can go to a judge and ask the judge to issue a bench warrant for your arrest. That's right, they can haul you to jail for not filling out a form. So if you get an Order for Disclosure in the mail, make sure you truthfully fill it out and return it. Not every debt collector will seek a bench warrant for failure to return an OFD, but some will and you don't want to spend time in jail just for failing to fill out a form.

What to do if you're abused or harassed by a debt collector

The percentage of delinquent accounts has reached record highs in the current economic climate. Unfortunately, that means that the volume of collection calls and letters has increased as well. With consumers strapped for cash, some debt collectors will inevitably resort to harassing, abusing and misleading consumers in an attempt to obtain payments. This post details many common violations of the Fair Debt Collection Practices Act committed by debt collectors. What can you do if you are have been harassed or abused by a debt collector in violation of the FDCPA?

First, save all voice messages left by debt collectors. Next, you should take detailed notes of every conversation you have with a debt collector. These notes don't have to be fancy. Just use a pen and paper and make note of everything that was said during the conversation. Then, sign and date each note and save them. Third, save all copies of letters and other correspondence from debt collectors. Finally, if you believe that the debt collector's conduct has violated the FDCPA, consider discussing your case with a consumer lawyer. You have a right to sue debt collectors that violated the FDCPA and receive money damages.

You cannot go to jail for not paying your debts

A fairly common tactic of shady debt collectors is to tell people that they will go to jail if they do not pay a debt. I've even heard about debt collectors impersonating the police and telling unsuspecting people that they have a warrant for them and that they will be arrested immediately unless they pay their debt.

You cannot go to jail for not paying your debts. Period. Any debt collector that tells you otherwise has violated the Fair Debt Collection Practices Act (FDCPA). The FDCPA prohibits false and misleading representations when attempting to collect a debt. This prohibition specifically includes telling you that the nonpayment of a debt will result in imprisonment.

Am I responsible for my deceased parent's debt?

When a person dies, their assets are pooled into what is known as an estate. The estate is responsible for paying the debts of the deceased. If there aren't enough assets in the estate to pay the debts, some creditors will hire a collection agency to pester the deceased's relatives for payment. These collectors will often imply that you, as a relative of the deceased, have a legal obligation to pay for the deceased's debts. This is almost always incorrect. You almost never have any obligation to pay for the debts of a deceased relative, even if you are named the representative of the estate. The only time you may have an obligation to pay for a deceased relative's debt is if it was a joint debt that you agreed to pay for, such as a joint bank account or if you co-signed a loan with the deceased.

No matter what the supposedly sympathetic bill collector tells you, it is rare for a person to be legally obligated to pay for a deceased relative's debt. You should consult with a lawyer before agreeing to pay anything.

Stop debt collection harassment without filing bankruptcy

Here are three ways to stop harassing phone calls and letters from debt collectors:

Write a cease and desist letter

Under the Fair Debt Collection Practices Act (FDCPA) a debt collector must stop contacting you if you write them a letter telling them to do so. Reference the FDCPA in your letter and state that you request that the collector cease all communications with you. Send the letter via certified mail and keep a copy of the letter and mail receipts for your records. This is the easiest way to stop the harassing telephone calls. But in my experience, a cease letter usually just causes the debt collector to either sell or transfer the debt to a different debt collector. Unfortunately, you must now write another cease and desist letter to the new debt collector. Its not unusual for debts to bounce around multiple times, so you might end up writing multiple letters.

Hire an attorney

The FDCPA prohibits a debt collector from communicating with you if they know you are represented by an attorney. Concerned that you can't afford an attorney? While an attorney does cost money, some consumer attorneys will write a cease and desist letter, handle any incoming collection calls, and negotiate a resolution of your debt for a small fee.  This will relieve you of the burden of having to deal with harassing phone calls and letters and let you focus on the more important things in your life.

Sue the debt collector under the FDCPA

If a debt collector violates the FDCPA, you have the right to sue the debt collector and recover damages. You are entitled to $1,000 in statutory damages, actual damages, and attorneys fees. Most consumer lawyers will accept a FDCPA case on a contingency fee arrangement. This usually means you will not have to pay any attorney fees unless your case is successful. Some of the more common debt collection practices prohibited by the FDCPA are:

• informing third parties that you owe a debt;

• contacting you at inconvenient times or contacting you at work after you’ve told the debt collector not to;

• threatening you with violence;

• using abusive or profane language;

• threatening to take legal action when the debt collector has no intent to do so;

• falsely implying that you committed a crime by not paying the debt.

Tips for dealing with debt collectors

Don't tell a debt collector where you bank or work.

This information is very valuable to a debt collector because bank and wage garnishments are easy and cheap ways to collect debts. Never voluntarily give this information to a debt collector. A favorite trick debt collectors will use to get you to tell them this information is to say "I already know you bank at ABC Bank." Surprisingly, many people will reply "No I don't. I bank at XYZ Bank." Don't fall for this trick.

Keep accurate records of all communications with debt collectors.

If you talk to a debt collector on the phone, immediately after hanging up, write down everything that was said during the conversation in as much detail as possible. Sign and date these notes. If a debt collector violates the FDCPA, your notes can be used as evidence of the violation. Similarly, be sure to keep every letter sent to you by a debt collector, including its envelope.

Demand that the debt collector confirm any agreement in writing.

If you agree to a payment plan or settlement with a debt collector, before sending any money, demand that the debt collector confirm your agreement in writing. It's not unheard of for debt collectors to try to back out of payment agreements. Also, if a debt collector gives you an extension of time to make a payment or to respond to something, make sure they confirm that agreement in writing.

Avoid long, open-ended payment plans.

Debt collectors will usually agree to monthly payment arrangements on the full balance, plus accrued interest. If possible, avoid this type of payment plan. With the high interest charged by most credit card companies, you will be paying the debt back forever. If possible, negotiate a fixed amount and term. This way you know exactly how much you'll be paying and for how long.

If you are sued, talk to a consumer lawyer immediately.

A debt collection lawsuit is serious business. Unless you are well-versed in the rules of civil procedure and have a good understanding of the deadlines involved in litigation, you should strongly consider getting advice from a consumer lawyer. I've seen many cases where consumers chose to represent themselves, had strong defenses, but ultimately lost because they failed to follow a court rule or meet a deadline.

How the FDCPA protects consumers against debt collectors

The Fair Debt Collection Practices Act (FDCPA) is a federal law that prohibits certain conduct by debt collectors. Its important to understand that the FDCPA only applies to communications with "debt collectors" (ie. not the original creditor collecting its own debt) and to "consumer debts" (ie. not business debts). Under the FDCPA, a debt collector is forbidden from doing any of the following:

• Communicate with you at inconvenient times or places. Inconvenient times are generally considered to before 8:00 a.m. and after 9:00 p.m., local time where the consumer is located

• Contact you directly if the debt collector knows you are represented by an attorney

• Communicate with you at work if you tell the debt collector not to call you there, or if the debt collector knows that you cannot receive calls at work

• Contact third parties and inform them you owe a debt

• Communicate with you after you've requested that the debt collector stop calling you

• Engage in conduct that is harassing, oppressive, or abusive to you

• Threaten you with violence or other criminal behavior

• Use obscene, profane, or abusive language

• Use false, deceptive, or misleading representations or collection methods

• Threaten to take legal action if there is no intention or authority to do so

• Falsely imply an affiliation with a government

• Falsely represent the amount, character, or legal status of a debt

• Falsely imply that the debt collector is an attorney

• Imply that non-payment will result in arrest or imprisonment

• Collect any amount that is not legally owing

This is not an exhaustive list, and there may be exceptions to some of the general prohibitions.