What Is a Debt Validation Letter?
Summary
A debt validation letter is a notice from a debt collector that outlines details about a debt you may owe. Find out what it means and how to respond.
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If you receive a letter from a debt collector, it might seem a little intimidating. One type of mailing you might receive is a debt validation letter, which debt collectors send when they’ve been hired to recover a debt you may owe to another creditor.1 The first step to dealing with a debt validation letter is to understand what it is and how it works.
Let’s dig deeper into debt validation letters and what to do if you receive one.
Understanding a debt validation letter
A debt validation letter is a written document that includes information about a debt that a creditor claims you owe, so you can confirm that it belongs to you.2 The Fair Debt Collection Practices Act (FDCPA) legally requires all debt collectors to send a debt validation letter within five days of first contacting you about collecting a payment.3 Debt collectors are individuals or companies who are hired by a creditor — the person or organization you owe money to, or the person or organization that has purchased your debt.
What information does a debt validation letter include?
Typically, the debt collector will include the following information in their letter:4
- Debt details: The letter will show the amount owed, including any interest, fees, payments and credits. It will also include the name of the creditor(s), the age of the debt and the account number if there is one.
- Debt collector details: The letter should include a clear statement that it was sent by a debt collector including their name and address.
- Borrower details: The borrower’s name and address will be included in the letter.
- Dispute information: The letter will state the right to dispute the debt. The debt will be assumed valid unless the borrower disputes it within 30 days. If the borrower disputes the debt in writing within 30 days, the debt collector will obtain verification from the original creditor.
- Borrower’s rights: The letter should state that the borrower has the right to request the name and address of the original creditor if it’s different from the current one.
Why is a debt validation letter important?
A debt validation letter is sent when a debt collector is trying to collect a delinquent debt. Delinquent debt is debt that is more than one full billing cycle (usually 30 days) past due. Debt validation letters help consumers confirm that the debt is really theirs.
A debt validation letter is also an important protection for consumers against scams. If a legitimate debt collector contacts you by phone or email, the debt collector must follow up with a debt validation letter within five days.5 Don’t send money to someone claiming to be a debt collector until you receive a debt validation letter.
While receiving a debt validation letter may seem scary, it’s important to not ignore it. If you owe money and don’t pay, the debt collector may be able to take legal action. After a lawsuit, they may be allowed to take a portion of your paycheck or put a legal claim on your property.6
How to request a debt validation letter
The FDCPA requires debt collectors to provide debt validation letters, so you usually don’t need to request one. However, if you’ve been contacted about a debt and haven’t received a letter within five days, requesting one is a good way to confirm if the debt is real or not.
If you’d like to ask for a letter, you may send a written request to the debt collector with a return receipt via certified mail. A legitimate debt collector is legally required to provide their mailing address. If someone who claims to be a debt collector won’t give you a mailing address, they’re likely not a real debt collector.7
What to do when you receive a debt validation letter
After you receive a debt validation letter:8
- Confirm that the debt is accurate. Check your credit report to see how debts show up. Then confirm that they match the debt validation letter. You may have forgotten the name of your creditor or missed an initial notice that a debt collector purchased your debt.
- Contact the debt collector. If you confirm that you owe the debt in question, reach out to the debt collector to discuss the next steps.
- Figure out how much you can pay. You might be able to pay what you owe in full, or you could ask to make smaller payments over time. You might also offer to settle the debt for less than you owe, although this can impact your credit and affect your taxes. Discuss your options with the debt collector and be sure to get in writing the details of any payment plan or settlement.
- Pay the debt. After you’ve confirmed the payment amount, you’ll follow the instructions on the debt validation letter to make your payment.
- Follow up with the debt collector. Once you’ve paid off the debt, ask the debt collector to confirm in writing that you no longer owe money.
What to do if you believe a debt validation letter has an error
Mistakes can happen. If you review your debt validation letter and believe you’ve already paid the debt or there has been an error, you have the right to dispute the debt. To file a dispute, you’ll need to follow the dispute instructions on the debt validation letter to request that the collector verify the debt belongs to you.
When you contact the debt collector, specify why you’re not responsible for the debt, whether it doesn’t belong to you or because you already paid it. You should include documentation, like payment receipts from your original creditor if you’ve already paid off the debt. The Consumer Financial Protection Bureau (CFPB) offers sample letters to help you get started.
Once you send this letter, debt collectors must pause collection efforts until they verify that you owe the debt. If they continue to insist on payment during this time, you may report a violation to the CFPB on their website or over the phone.
Stay informed and take control
It can be intimidating to be contacted by a debt collector, especially if you’re not sure what to do next. The first step is confirming that your debt validation letter is correct. You can do that by checking your credit report to ensure it matches your records and the debt validation letter or by contacting the debt collector for more information. If the debt is accurate, work with the debt collector to discuss your repayment options. Above all, don’t panic. It may be overwhelming at first, but having a plan in place can help you get your finances back in control.
Sources
1 https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-collector-and-why-are-they-contacting-me-en-330
2, 3 https://www.ftc.gov/legal-library/browse/rules/fair-debt-collection-practices-act-text
4, 6 https://www.experian.com/blogs/ask-experian/what-is-debt-validation-letter/
5, 7 https://www.consumerfinance.gov/ask-cfpb/how-do-i-tell-if-a-debt-collector-is-legitimate-or-a-scam-en-1699/
8 https://www.experian.com/blogs/ask-experian/how-to-pay-off-debt-collections/
This article is for general education and informational purposes, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any purpose and is not intended to be and does not constitute financial, legal, tax, or any other advice. Parties (other than sponsored partners of OneMain Financial (OMF)) referenced in the article are not sponsors of, do not endorse, and are not otherwise affiliated with OMF.
