Collection Agency Dispute Letters

Debt Validation Information for Consumers

Oct 13, 2009 Candice Gillingwater

A dispute letter may be sent to a collection agency at any time to dispute a debt and request a debt validation from the collection agency.

Debt validation is the process by which a consumer can legally request that a collection agency prove a debt belongs to him or her. This is accomplished with a dispute letter. A dispute letter requesting validation of a debt may be sent at any time.

What is a Dispute Letter?

Due to the sheer volume of information maintained by the credit bureaus, credit reporting errors occur regularly. When collection accounts appear on a credit report, they do substantial damage to a consumer’s credit score. If a consumer discovers a collection account on his or her credit report and is unable to identify its origin, a dispute letter is in order to determine the validity of the negative trade line.

Within a dispute letter, a consumer disputes the fact that he or she owes the debt and requests proof of the debt in the form of debt validation. A dispute letter may also request the following:

• The collection agency’s license number in the consumer’s state of residence
• The name and address of the original creditor for the debt
• Proof that the collection agency was hired by the original creditor to collect the debt
• An explanation of the amount requested by the collection agency
• No further telephone contact from the collection agency

The Fair Debt Collection Practices Act and Dispute Letter Responses

The Fair Debt Collection Practices Act (FDCPA) states that until a collection agency provides a full debt validation in response to a dispute letter from a consumer, any and all collection activity must cease. Collection activity includes but is not limited to:

• Telephone calls to the consumer about the debt
• Letters to the consumer about the debt
• Validating the debt to any third party
• Reporting the debt to the credit bureaus for insertion into a consumer’s credit report
• Selling the debt

Because the FDCPA does not identify exactly what constitutes a debt validation, consumers should be aware that many collection agencies will send a printout of the consumer’s name, address, and the amount of the debt as a response to a dispute letter. Because this information only proves the collection agency’s claim that the debt is owed and not that the debt is actually owed, a printout is not generally considered legal proof and will rarely hold up in court (See What Is Legitimate Debt Validation?).

Time Frame for Debt Validation

Contrary to popular belief, the FDCPA does not force a collection agency to respond to a dispute letter within a certain time frame. Because a collection agency must provide the consumer with a debt validation before validating the debt to a third party, many consumers use this opportunity to dispute the debt in question with the credit bureaus. Unlike a collection agency, a credit bureau is legally bound to a 30 day time frame in which to investigate and either validate or invalidate a debt.

If a collection agency does not respond to a consumer and cannot legally validate a debt to an investigating credit bureau, the debt is very likely to be removed from the consumer’s credit report. In the event that the collection agency opts not to respond to the consumer’s dispute letter yet validates the debt to an investigating credit bureau, it is in violation of the FDCPA and may be subject to a consumer lawsuit (See Illegal Debt Collection Methods).

Although the fine print on most "First Notice" debt collection letters states that a consumer has 30 days to dispute the debt or the collection agency will deem the debt valid, a consumer may dispute the debt at any time. This limitation applies only to collection activity and not to legal disputes.

The copyright of the article Collection Agency Dispute Letters in Personal Budgeting/Finance is owned by Candice Gillingwater. Permission to republish Collection Agency Dispute Letters in print or online must be granted by the author in writing.

A Dispute Letter Can Stop Collection Activity