There are more than 1 billion credit cards in our country today, with Americans carrying roughly $8400 of debt on average. This could take 30 years for the average individual to pay off. Dealing with debt and credit issues can be an emotional, and often uncomfortable process. But, it doesn’t need to be.
As an industry, third party debt collection is committed to treating each consumer with dignity and respect, along with offering solutions that benefit both the consumer and the creditor.
As a consumer, you have rights that protect you under state debt collection laws, as well as under the federal Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA). By understanding the facts, you will be empowered to help yourself cope with your collection concerns and solve your debt problems.
Collect the Truth wants to be a resource to you. We’re answering some of the most common consumer questions, and hopefully shedding a little more light on what you might not know about third party collection and consumer rights.
To learn more, you may also visit www.consumerfinance.gov for more information from the federal Consumer Financial Protection Bureau (CFPB), which offers education, resources, and assistance regarding financial products and services.
Can I Dispute a Debt?
You have a federally protected right under the Fair Credit Reporting Act (FCRA) to dispute a report made to a consumer reporting agency about a debt. You also have the right to dispute a debt or any portion of a debt that a debt collector claims you owe by filing a dispute under the Fair Debt Collection Practices Act (FDCPA).
How Do I Dispute a Debt under the FDCPA?
Under the Fair Debt Collection Practices Act (FDCPA), you have the right to dispute a debt or any portion of a debt the debt collector claims that you owe. In order to exercise your rights under the FDCPA, you must follow certain steps.
You will receive your initial notice of the debt. Here’s what is required to be sent to you within five days of the debt collector’s first contact with you (commonly called the validation notice):
- Amount of the debt.
- Name of the creditor to whom the debt is owed.
- Statement telling you that you have 30 days to dispute the debt or the debt will be assumed to be valid.
- Statement that if you dispute the debt in writing within 30 days, the debt collector must provide written verification of the debt, including name and address of the original creditor, if different from the current creditor
First you must dispute the debt in writing.
You can always dispute a debt, but only a written dispute from you to the debt collector during the 30-day validation period will trigger a debt collector’s duty to provide verification of the debt. When you verbally dispute a debt, the debt collector is required to mark the debt as “disputed” with any consumer reporting agencies to which the debt has been reported. However, the debt collector is still free to continue to pursue debt collection without providing you with verification of the debt.
How Do I Dispute My Debt in Writing?
Your letter must make clear that you are disputing the accuracy and/or validity of the debt. Provide specific information regarding your dispute such as a wrong name, suspected identity theft, or any other information that could help substantiate your dispute. Though not required, you may want to send your letter by certified mail so you have proof that the debt collector received your written dispute.
Verification of the debt is important.
If, within 30 days after you receive the validation notice outlined above, you request verification of the debt in writing, the debt collector must cease collection of the debt until the debt collector has obtained verification of the debt and a copy of the verification has been mailed to you. If the debt collector is unable to provide you with verification of the debt, he or she must cease all collection efforts.
For verification of a debt, generally it is considered sufficient for the debt collector to provide you with a statement that the amount being collected is the amount owed, along with any supporting documentation or records from the creditor.
If you fail to dispute the debt in writing within 30 days of receiving the validation notice, the debt collector is not required to provide you with verification of the debt under the FDCPA. Also, the debt collector is not required to comply with subsequent verification requests if the debt collector has previously provided verification of the debt.
What are Statutes of Limitation and How Do they Affect Me?
A statute of limitations is a law that establishes a time limit for bringing a civil suit. For consumer debt, a statute of limitations governs the amount of time allowed for a party that owns the debt to seek a legal remedy. Generally, the clock starts ticking on the statute of limitations once a breach of contract occurs. If the statute of limitations expires, the alleged wronged party can no longer take legal action.
Usually states will dictate in their laws specific time periods for specific contracts. Consult your state’s statutes of limitation.
You should know the term “tolling statute.” Tolling statutes deal with events that cause a statute of limitations’ clock to stop. One common instance of this is active military service. Some states’ tolling laws will suspend a statute of limitations, or totally reset the clock, when a partial payment, acknowledgement of a debt or promise to pay is made by the consumer.
It is important to know that even if the statute of limitations has expired on a particular debt, you are still obligated to pay the debt, depending on the state in which the debt was incurred. Because laws vary widely depending on the type of obligation and the particular state, consult your state’s statutes of limitation.
It is acceptable practice in most states for debt collectors to continue to pursue a debt after a statute of limitations has expired provided that the debt collector does not threaten litigation.
Also you need to know that a state’s statutes of limitation do not hinder a creditor or its agents from reporting a debt to a consumer reporting agency, provided that the debt is reportable under the provisions in the Fair Credit Reporting Act (FCRA).
The FCRA allows a debt to be reported for up to seven years from the date of delinquency, a longer time than many states’ statutes of limitation.
Should I Trust Websites That Claim to Verify My Debt?
Some consumer websites claim to provide consumers with information concerning their rights. These sites often cite erroneous information about what debt collectors are required to provide to verify a debt under the FDCPA. Your best source for accurate information regarding any disputed debt should come first from the debt collector. Then, if there is something you find objectionable, follow the process described above for disputing that debt.
You also have rights under the Fair Credit Reporting Act (FCRA), and you have additional rights to dispute a debt if the debt is being reported to a consumer reporting agency.