If you’re drowning in debt and need major credit repair, don’t automatically assume that debt collectors have your best interests at heart. Their job is to get paid, and the truth is that sometimes, unscrupulous techniques are used that can be illegal. Before agreeing to a payment plan or even filing for bankruptcy, demand that the collector verify your debt in writing.
Debt validation: A bankruptcy scenario
Bankrate.com provides a useful example of a scenario in which someone should demand that a debt collector validate a debt. A couple has a home with a mortgage that is in both their names. One person is in collections with $30,000 in credit card debt solely in her name. She is considering filing for Chapter 13 bankruptcy, but the couple is concerned about losing the house in the deal.
While there are some potential complications that would require the consultation of a bankruptcy attorney (or two, if a second opinion is desired), Bankrate points out that filing for either Chapter 13 or Chapter 7 bankruptcy will generally not put a home at risk.
How to get aggressive with unscrupulous debt collectors
Get everything in writing when dealing with debt collectors. Don’t reveal bank account information when they push to set up automatic payments. Demand that the debt collector provide a fax number or address to which you can submit a request for debt validation. Simultaneously, dispute the debt in question.
By demanding debt verification, you’re demanding that the debt collector prove that you owe the money, that the collector has the legal right to collect and that the original company that held the account is clearly identified. By disputing the debt, you’re one step ahead in case the debt is erroneous or the collector does not have the information. Few things are as fruitless as giving money to a collection company that may not even own your account.
Know your legal rights
Under the Fair Debt Collection Practices Act, a consumer has the right to force a debt collector to validate a debt. Attorney Tom Martin of Price Law Group says that if debt collectors fail to comply, they cannot legally continue to harass a consumer for payment. If the collector continues, the consumer may even be entitled to monetary damages. But that’s not all:
“If a debt collector receives a dispute from a consumer, and the debt collector has been reporting the consumer’s account to the credit bureaus, the collector must also start reporting the account as disputed,” Martin reminds.
As a final note, the “get it in writing” directive must also apply to the consumer. If any debt payments are made, receipts and statements should be kept as proof in the event of a lawsuit.