Letter to Collection Agency - The Debt Validation Strategy

Letter to collection agency...

Before sending a letter to collection agency concerning collection account information appearing on your credit reports, you should first develop a debt collection strategy. Why?

Because if you do it correctly it will force the debt collection agency to either comply with the credit laws or it will arm you with the necessary documentation to use against them later in court.

Either way it can be used to help you to legally improve your credit.

A Step by Step Debt Validation Strategy

  1. First, send the credit bureaus a dispute letter to dispute the collection account information reporting on your credit reports. Here's a sample dispute letter you can use to dispute your collection account with the credit bureaus.

  2. Next, send a letter to collection agency by certified mail. Here's a sample debt validation letter you can use. Make sure your letter to collection agency requires them to provide you with proof of the following:

    1. Proof that the collection company owns the debt/or has been assigned the debt by the original creditor.

    2. Copies of statements from the original creditor.

    3. Copy of the original signed loan agreement or credit card application.

    4. Proof of the collection company's authorization to collect debts in your state.

    5. Proof of the actual amount of the debt they are attempting to collect.

  3. Wait 30 days for the collection agency to reply. If they don't send you satisfactory proof, but continue report the collection account on your credit reports, send a 2nd certified letter to collection agency with a copy of your first certified mail receipt and a copy of your first letter to collection agency. In the 2nd letter to collection agency tell them that they have not complied with the FDCPA and are now in violation of the Act. Tell them they need to immediately remove the collection account from your credit reports or you are going to file a lawsuit against them because they are in violation of the FDCPA, section 809 (b).

  4. Wait 15-20 days to hear back after you send the 2nd certified letter to collection agency. They will either delete the collection account from your credit report or simply not reply at all.

  5. If the collection agency refuses to delete the collection account from your credit reports, you have to go further with the debt validation process.

  6. You can file a lawsuit in small claims court against the collection agency for violating the FDCPA. Once you receive replies to the dispute letters you sent to the credit bureaus, stating they have "verified" your disputes, you can include their letters as a part of your lawsuit against the collection agency.

  7. You see, in response to your dispute, the credit bureaus were supposed to contact the collection agency to verify if the collection account information they are reporting is accurate. So the credit bureau's reply to you "verifying" the accuracy of the collection account is additional proof that the collection company is continuing collection activity for a debt that they did not properly "validate". This is a violation of the FDCPA. Contact your local county court clerk about the procedures to file a small claim action against the collection agency. It's usually inexpensive and you don't need an attorney to do it for you. When you go to court, present copies of your documents as proof.

  8. Next, contact the credit bureaus again. Notify them in writing that the collection agency did not verify the debt per the FDCPA. Include copies of your proof. Request the credit bureau to provide you with the "method of verification" they used to "verify" the accuracy of the debt with the collection agency. You are entitled to demand they do this per the Fair Credit Reporting Act. Make sure you indicate that the collection agency did not respond to your request for debt validation.

Here's a sample method of verification letter you can use. If they don't provide you with reasonable information on how they verified the collection account information and the collection agency has provided you with validation of the debt, chances are no reasonable investigation was actually performed. This may be considered as "willful non-compliance" under the FCRA. So make sure they know this.

You should then have enough proof to file a lawsuit against the credit bureaus in either small claims, state or federal court. The basis of your lawsuit is the fact that the credit bureaus could not provide a satisfactory "method of verification", nor did they conduct a "reasonable investigation". Yet they have refused to delete the collection account from your credit report in violation of the Fair Credit Reporting Act (FCRA).

Send the credit bureaus a letter letting them know you are suing them. Here's a sample settlement demand letter you can use. They should delete the collection account immediately. If not, proceed with your lawsuit and present your documents to the judge.

If you are not comfortable with filing a lawsuit yourself, you can hire a local consumer protection attorney and provide them with copies of your documentation to file a lawsuit on your behalf.

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