How To Beat Debt Collectors At Their Game

Last month I focused a lot on 3rd party debt collectors going after foreclosed homeowners and the deficiency they feel they are entitled to. This month, I'm going to go more into detail on how to beat these collection companies no matter what type of collection account they are on the warpath for money over.

If you receive a notice in the mail from a debt collector telling you that you now owe them for some debt, maybe its a medical collection or a charged off credit card, or even the difference left over after a car repo, it should tell you clearly that you have 30 days to dispute the debt.  If the first contact you have with a debt collection company is that they call you on the phone, you can confirm your name if you want, but do not confirm your birth date, your social security number, your phone number, your address, or anything else.  Do not acknowledge that alleged debt.  Tell them you do not communicate with companies like theirs over the phone and if they have something to say to you, they can put it in writing and mail it to you.

Once you have received that letter, its time to start the fight. You want to immediately fire off a letter disputing the alleged debt and demanding validation.  I go so far as to not even call their account number an account number. Its a reference number.  I do this because there is no way I'm going to acknowledge that my client has an account with them.  This is their own made up account number to try and make you think their claim is legitimate. So, this is where you start to fight back.

Your validation letter should tell them that you are responding to their letter and you do dispute their claims. In fact, you will need them to validate and prove to you that you owe them that alleged debt.  You see, there may be some alleged debt, but do you owe it?  That's what they need to prove.  Don't fall for the lame Chaudhry minimum standard of "verification" of the alleged debt. You don't need verification and they can't provide that anyhow since they are a 3rd party.

You are demanding validation, which is the proof, the documentation that supports their claim.  You are entitled to receive from them a copy of the contract showing you agreed to do business with them. That means that the contract names them as the creditor that actually lent something to you of value, and your name agreeing to compensate them or pay them back for what they claim they lent you.  Then it has to have your signature on it.  A contract between you and the alleged original creditor is not a contract between you and the 3rd party collector and it isn't full validation.

You will also need to tell them to provide proof that they own the alleged debt or that they have been authorized to demand payment, which means its been assigned to them by the original creditor.  Sometimes they will send a bill of sale, and that doesn't happen too often, and occasionally though rare, they'll send you a copy of their assignment. But sending this, even with a copy of the original agreement, is not full validation.

You are also entitled to ask them to provide a full accounting.  This is not just 3 years(or however many they send) of billing statements but also means an accounting ledger. The accounting ledger should show every charge, every fee, interest added, credits, debits, payments, every single event that changed the amount on the alleged account. Billing statements that show what was charged that month is important too because you have the right to say, "Hey, I didn't buy that or authorize that." Leave that for the courtroom though.  We never want to admit anything to a 3rd party debt collector.

You will also want to tell them that since they furnished information to your credit reports, they are required to have your consent to do so in writing, so they need to provide a copy of that consent or authorization.  They won't be able to provide this but this only helps remove them from the credit report. It is not part of validation and will not mean they have to stop trying to collect if they can't produce it.

A couple other things to ask for is proof that the alleged debt is not outside the statute of limitations and if you're in a state that requires licensing and/or bonding, you need to have copies of those documents as well. You also have the right to ask for a full chain of assignment, which means every collector that has ever had it in their possession, and proof that their collection fees are agreed to in the original contract. Heck you can actually even tell them that you have a right to know how much they paid for the alleged debt because that is closer to the phony baloney amount they should be trying to collect.

After you dispute with them and demand validation, you want to write to each of the credit bureaus and dispute each of the collections with them. You will do this about a week or two after you send the letters to the collectors.  This is very important because once you demand validation from a debt collector, they are required to stop all collection activity. Verifying with credit bureaus is considered collection activity and if they do it before they send you validation, they've just broken the law.  They actually need to remove the information they have furnished while its in dispute.  

Many times you will see comments on your credit report saying that "consumer disputes" or similar language.  If those comments are on a 3rd party collection account, that is a violation of law and proof that they are breaking it. Since communicating via the credit report is considered collection activity, putting a "dispute" comment on there doesn't void the fact that they are still trying to collect when they are supposed to stop all collection activity.  Its just proof that they are ignorant of the law or they don't give a rip about the law.  We're going to jump back to bureau disputes in a bit.

Now, when debt collectors respond to your dispute and demand for validation, many times they will send you the name, amount and a few tidbits of information about the alleged original account and then tell you that they have verified.  They haven't, that's hearsay. If they send you any documentation, it might look like they've proved the alleged debt, but its not validation. Its not proof you owe them.

Your response is a very important part of beating them.  You don't want to attack their response until you get the results from your bureau disputes though.  This is because not all of the collectors will usually reply to your demand to validation but they will respond to the bureau dispute by claiming they verified it.  That's a big NO-NO.  You are also going to want to check those bureau disputes and see which collectors were stupid enough to comment that the alleged account is disputed.  You will be using these things against them and this is very effective to make them hit the road.

Now that you've received your bureau dispute results back and the debt collectors that have bothered to respond to your demand to validation are pretty much all back to you, its time to contact the collection companies again.  For those that told you they are closing the file and notifying the bureaus, you don't need to send anything to them.  Just make sure they actually deleted. If they didn't you will dispute that again with the bureaus.  For those that claimed they verified, you need to get real tough with them.

Your response to those who claimed they validated or verified in response to your demand for validation, you need to tell them something like this:  "I've received your letter claiming you have validated (or verified) the above reference number. But the problem is, you didn't provide the documentation that proves I owe you anything.  Where is the contract between your company and me? Where is the full accounting because I can't just take your word for it that I owe some company I've never contracted with, some made up number?  Where is your license and bond?  In fact, from what you sent, I can see that you are trying to collect for something that is outside the statute of limitations for my state (if that is the case).  

You also haven't proved you have any right to be on my credit report because I know for a fact I've never contracted with you nor consented to you being able to make any communication on my credit reports.  You're violating the FDCPA by continuing collection activity and you're violating the FCRA by furnishing information and verifying unvalidated information, disputed information, erroneous information, when no access to my credit reports has ever been granted to you.

So, get your crap off my credit reports until you can provide some proof that I actually owe YOU! You haven't done that yet and by law, you are to cease collection activity immediately.  I reject your hearsay as being validation or verification. I reject the bills you sent as being validation because they are not. I reject any of your claims of validation or verification because you haven't proved anything."

That's pretty much how a follow up letter is written.  Now, for those that verified with the bureaus but didn't bother to even respond to your demand for validation, you should send them a letter similar to what I just gave you but blast them for verifying without even responding to your demand for validation.  You can even tell them that you intend to sue them for their FCRA and FDCPA violations if they don't remove this reference number and information they furnished to the bureaus from your reports.

Now, your follow up letters to the bureaus will be to dispute each one as having demanded validation from each one and they have not validated and therefore are still Unverified so please delete ASAP.  By the next time you get your responses back from the bureaus, you should see some great results.   Sometimes though, they just don't have any respect for the law and they keep leaving their bs on your report. You may need to keep attacking them month after month to remove these stubborn ones.

I hope that those of you who are working to improve your credit will take this information and use it.  It does work.  Its a basic attack and it's based on laws written to protect you from scum like debt collectors.  Remember, you don't owe these punks so fight to keep your hard earned money in your own pockets, not theirs.  Its your right to spend your money as you want, not give it over to these extortionists who will continue to harass you in an attempt to steal it from you if you don't knock them down and out of your lives.

Now, for those of you that want help with removing collections, we are extending our Christmas special into the New Year!  We use advanced techniques and put laws, case law, statutes, Supreme Court rulings and more in the debt collectors' faces. We go well beyond the attack shown above to get you the fastest results possible, all while staying ethical, honest, and within the law. Our special is valid through January 31, 2015.

Our special will save you anywhere from $100 - $300 depending upon the number of collections on your report, as well as other derogatory items.  To qualify for the special, you need to have at least FOUR 3rd party collectors furnishing information on your report.  You will need copies of your credit reports for all 3 major bureaus so get them together and contact us so we can help you have a new, pretty credit report in this exciting New Year!  My email address and phone number are up on the top right hand side of this blog.  I look forward to hearing from you and helping you fight the debt collectors and win!

If you have found this blog helpful to you, please consider donating as a sign of your appreciation for information I have freely given to you.  The "Donate" button is on the right side bar.  Thank you for your generosity.

What Is A Validation Demand Letter?

If you are going to work on repairing your credit, you really need to know what a validation letter is, what is requested/demanded, who it goes to and why you can use this.  Many credit repair companies, and people who work on repairing their credit themselves, don't use the validation letter, and so, are not as successful at improving their credit report.

The law that gives you the right to demand validation is the Fair Debt Collection Practices Act (FDCPA).  It is a federal law.  The exact section of the law that requires them to validate when you request it is 15 USC 1692g Sec.809(b).  This law says:  "If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section 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 a 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 subchapter 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." 

You will notice that the law uses the word "Verification" but it actually tells them that they have to send you the copy of that Verification - the PROOF, which is the Validation, of the alleged debt.  Now, I know it says the 30 day period in there.  But this is when they obey the law and notify you within the first 5 days of initiating collection activity, that they are going to be trying to squeeze money out of you that doesn't belong to them and you have the right to dispute it.  You will also see that it says "verification of the debt."  You will notice that they don't want to send you the proof of the alleged debt, they only want to verify the name, address, original creditor info and amount, to you.  They don't like you to require them to send proof of the alleged debt because they can't.  They don't have a valid contract with you. 

Now, this law applies to all 3rd party collectors.  It does not apply to original creditors. For original creditors, many states have fair debt collection laws that mirror the FDCPA but also include original creditors.  I just love when my clients are in one of those states.  (I did another post sometime back about disputing with original creditors.  Look for it on my list of posts on the right side bar if you need help with them).  Now, at the end of this post, I'll touch more on this law above and clarify a bit more on it. 

You have the right to demand validation from your alleged collectors.  Most of the time you will know who they are because they report negative credit against you on your credit report.  Occasionally you will just get phone calls and letters in the mail from some obnoxious collection company that you don't see on your credit report.  I should warn you, though they might not be on one of the big 3, TransUnion, Experian, and Equifax, they might be reporting against you on Innovis, another big credit bureau that enjoys a lot of activity from collection agencies, and who hardly ever gets made aware of to unsuspecting consumers like you and me, so they can secretly destroy your credit without too much notice.

Validation is NOT Verification, though many collection companies love to mix the two up.  They do this for their convenience.  Its their little scapegoat method of avoiding the production of validation, which they cannot fully do.  You know when they're pulling this little scam, trying to convince you that they're right, you're not, you have to pay them.  Their response letters to your specific demand for validation will say something to the effect of, "We contacted the original creditor and they verified that the name, address, account number and amount we are reporting is correct." I didn't see the word "Validation" in that statement, did you?

Validation is the production of PROOF! Physical, paper, PROOF! Sometimes its an audio recording, you know, the crap that they insist on doing for "Quality Assurance?'  Validation is producing a contract between you and them.  You should want to see both sides of it, front and back, to prove there were no alterations rendering it void, after you signed it.  An alteration can be any markings, any staple marks, something that changed the piece of paper in any minute way after it was signed.  But, if they are a 3rd party collector, you don't have a contract with them.  They can't produce one because they buy alleged bad debts, they don't originate them.  

3rd party collectors should also prove that they have the right to collect on the alleged debt.  They should show the proof that they purchased it or were assigned it.  There are a number of states that require them to be licensed or bonded or both, to do any collection business there.  In fact, in Illinois, not only do they have to be licensed in the state, they have to be licensed in Chicago for any alleged debts they want to extort, um, attempt to collect on for Chicago residents.

Collectors also should provide validation in the form of a complete transaction history.  Every charge, every payment, every interest charge or other charges and fees for the entire life of the alleged debt.  There are case laws backing this up.  Another big thing that is required for validation is whether or not the alleged debt is Time-Barred.  This means it is outside the Statute of Limitations for your state.  This is a number of years that varies from state to state. It can be as little as 3 years to as long as 15 - which is absolutely ridiculous, I have to add.  This is a great way to make them go away.

I include a lot of things in my letters demanding validation. I tell them I want to see a contract between me and them. I want to see the front and back of it.  I want to see the full accounting and I put case law in there.  I want to see the documentation giving them the right to collect on the alleged debt. If the client is in a state that requires licensing/bonding, I tell them I want to see that. (I actually look them up every time for this, so that I can throw it in their faces if I see they are not, or they have been spanked by that state already).  I tell them I want them to prove that everything they are reporting on the credit reports is 100% accurate. I want them to prove the alleged debt is not outside the statute of limitations for my state.  (When I've checked and it is, I throw that at them too)!

Now, I actually get more intense on my letters.  I tell them they need to prove that they have a valid contract (at least the 4 basic elements) and that the original creditor had a valid contract, (at least the 4 basic elements), and I want to see that original contract, front and back.  I want them to prove there was no fraud committed.  I want them to provide the source of the funds that the original creditor used to actually lend the money that funded the credit.  (Oh, wait!  They don't lend money do they? They lend what is called "Credit Money" and that's illegal!  They create it out of thin air).

Towards the end of the letter I add a "Limited Cease and Desist" and a call to action.  The call to action is to prove it or remove it immediately. Prove it by providing me everything I requested, in writing, and not some cheapo, dummied up computer print out or hearsay typed onto the letter saying "we investigated and yep, we're doing everything accurately and you owe us".  The real deal.  The actual original or copies of the original documentation. 

You should be including most of these things in your letters to the 3rd party collectors. At the very least, they should be providing the contract between you and them, the contract between you and the original creditor, the full accounting, the proof they have the right to collect, proof they are accurately reporting to the bureaus, and proof the alleged debt is within your state's Statute of Limitations.   There are only 2-3 things in this list that they can lawfully provide that they can send you.  They can make claims that they validated fully, but that's a lie.  The only things they can really produce is the original contract (which is not a valid contract because the original creditors ALL commit fraud), their proof that they have the right to collect (which is paper proof for the game of collection but according to 73 AmJur 2nd Ed. Sect. 90, they have no right to collect anyway if they were not on the original valid contract), and whether or not the alleged debt is Time-Barred.

Now back to the FDCPA 15 USC 1692g Sect 809 (b).  This law mentions the 30 day period.  But, what if you are demanding validation after that original 30 day period, does it apply?  Yep, it sure does.  The 30 day period applies to you when they send you the original "Dunning Letter" within 5 days of starting to collect on the alleged account.  But, if you demand validation after that point, the law still applies.  They are required by law to produce the validation or cease collection activity.  Do they have to produce the validation?  Nope, but then, they also cannot resume collection activity until they do.  This law protects you!

Now, when you send out your demand for validation, you need to send it Certified Mail with Return Receipt. Costs a little over $6 for each letter but it is worth it, oh man, is it worth it.  If you get sued and they didn't validate, and you have the proof you demanded it, you can beat them in court.  That is proof of their violation of Federal Law!  Many times you will get a response back saying they will be removing it from all the credit bureaus. Love those!  Sometimes they give other stupid responses letting you know that they would rather continue to violate the law than obey it, because extorting money from people is their game and they don't stop without a fight.

To find out how to respond to them, look at the previous posts I wrote about a month or two ago I think, that tells how to fight back in your follow up letter.  Oh, one more thing, as soon as you get the green card back that proves they received your demand for validation, dispute with the bureaus.  It is against the law for them to verify (its considered collection activity) without first validating.  Many will come off by using this procedure - demand validation first, hit the bureaus with disputes second.  If they verify, they've just broken another law!

If you don't want to have to write all the letters yourself and would like me to help, please email or call me.  I love the game. I love helping you beat them! My email and phone number are up at the top, on the right hand side.  I answer emails and answer my phones.  I write letters for people in all 50 states.  The letters I write are not the junky stuff you find on the internet and they are not the form crap that the biggie credit law firms use to drag out the process (costing you more), and that don't work effectively all the time.  (See my post on credit law firms!)  I write great letters that get results! I'd love to write some for you too!