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It may seem the obvious thing to do but people often pay debts without ever confirming the debt itself. Often times when a debt is sold to a collection agency or assigned to a third party debt collector, the consumer will simply pay it because they think that improves their credit. This isn’t the case.

When you receive a bill from a collection agency, the first thing you should do is VOD: Validation of Debt. There’s two reasons to do this. First, you want to make sure you do owe what they are claiming and second, if the collector doesnt have proof of the debt then they cant come after you for it or report it to the credit bureaus.

If a collection agency or debt lawyer (any third party debt collector) knowingly reports a debt to the credit bureaus that they could not validate, it is a violation of the FCRA (Fair Credit Reporting Act). Punishable by fines of up to $1,000.00… in your pocket!

You’d be surprised as to the amount of sloppy record keeping that can take place – especially on old debts that have been assigned to a third party debt collector. Add a second or third placement debt to the mix and VOD is even harder for the collector. There is nothing wrong with you requesting to have a debt validated. It’s your right and it is something you should always do.

Upon receiving the collection notice, you should immediately send a letter to the collection agency and ask them to provide you with proof of the debt. Usually this is your contract with the original credit or even credit card statements. A print out from the collector’s computer is not sufficient.

Once you’ve determined that the debt is either valid or not, then you can move forward with a plan of action of either disputing it further or deciding to settle it for a reduced amount, and hopefully, a better credit rating. Simply paying it should not be an option as that will do nothing for your credit rating. If the debt’s already been reported to the credit bureaus as a “collection account”, you will definitely want to negotiate payment in exchange for a deletion from the collector on your credit records.

The law that gives you these rights is the FDCPA. Fair Debt Collection Practices Act is often used by consumer’s to deal with bill collectors. They have to follow the act, and that includes validating the debt, not harassing you and many other areas of protection.  Your right to validate the debt under the FDCPA is FDCPA Sec 809. Validation of debts [15 USC 1692g]

A bill collector CANNOT charge you for providing records to you.  

Want more tips of repairing your  credit and settling old debts? Get lifetime access to our DIY credit education which includes over 40 sample letters. Entire membership and lifetime access is only a one time fee!

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