What is the difference between validating and verifying a debt

The debt collector must send their validation letter within 5 days of first contact. Then, if you send your verification letter within 30 days after first contact, the debt collector has to cease payment collection until they have verified that the debt is yours. If you receive sufficient validation, you can confirm that the debt is within the statute of limitations. You can also check to see if the debt is within the credit reporting time period.

If your debt is past the credit reporting limit, debt collectors are not able to report your debt to credit agencies. This information can help you decide whether to pay your debt, dispute the debt, seek a settlement, or if you should request the debt be removed from your report.

Debt validation can be extremely effective. If the debt collector is unable to validate your debt, you can request for the debt to be removed. A debt validation program also helps you decide on the best moves to make regarding your debt, including waiting for the statute of limitations, requesting a debt settlement, or simply paying your debt in full.

With debt settlement , you work with a third-party company in order to negotiate a lower amount than what you owe or set up a better payment plan. When you settle a debt, you come to an agreement with the creditor about the amount of money it will take to resolve the debt.

With a better payment plan or a lower amount of total debt, you are more likely to make payments and, sooner than later, eliminate the debt. Third-party companies are typically used in credit card debt settlement. They will contact your creditors in order to ask for a better payment plan, or even reduce and settle the debt. The debt settlement company will often negotiate with the creditor to reduce the total amount owed into a smaller, lump payment.

They charge a fee, which is often a percentage of what you are saving on the debt. During the debt negotiation process, they will often require that you deposit money into an account to save towards the lump payment. This is the person we will focus on below. Collection agencies are in the business of making money.

When they buy or contract to collect debt, they are buying hundreds and even thousands of past due accounts. Your account may or may not be at the top of their list to collect, but if it is not, contacting them to dispute the debt will definitely put you there. The proof. There is a difference between the proof the debt collection agency must provide to you, the consumer, and what they must provide in a court situation. The burden of proof is much lower when the agency is dealing with you.

They only need to provide you with a description of the amount owed and the name and address of the original creditor. In their original contact, they must also provide the notice that you have 30 days to dispute the debt. Here is a list of our partners and here's how we make money. Before you pay a dime to a debt collector, confirm that the debt belongs to you. Debt collectors are legally required to send you a debt validation letter, which outlines what the debt is, how much you owe and other information.

This option is best if you plan to pay the debt in collections. These two letters are important because errors in debt collection are common. It must be sent within five days of the first contact. The debt validation letter includes:. The name of the creditor seeking payment. A statement that the debt is assumed valid by the collector unless you dispute it within 30 days of the first contact.

Moreover, the letter is not capable of helping put a stop to the harassment from a collections agency. Having a debt verification letter alone is not sufficient to stop debt collection. The collections agency can still abide by FDCPA laws and continue collection activity and taking advantage of individuals who attempt to use the credit reporting system without understanding it thoroughly.

Going back to the earlier issue with the FDCPA and its lack of a clear definition of what compromises a debt validation letter, collections agencies can theoretically provide any account documentation to a consumer. Since this is considered as adhering to the law, there are several collections agencies that use this on consumers who do not fully understand the difference between such letters.

But what the court truly needs is the original contract signed by a consumer addressing the collections agency to provide him a legitimate debt validation. Because it is not clearly stated on the FDCPA, there are several collections agencies that only provide a debt verification letter.

The main difference between the two, however, is the fact that a debt validation letter can demand relevant facts and details that have commonly exposed fraudulent plans with most collectors. Even though the two letters are a part of a debt dispute letter, consumers can make use of the debt validation letter to contest any abusive actions of the creditor or a collections agency.

In the event of a court procedure, a legitimate debt verification letter is the only acceptable documentation which proves that a consumer owes the debt. Because a debt verification letter does not prove anything, it is useless to bring one.