How Do Collection Agencies Validate Your Debt?

Problem: "I have a debt with XYZ company that has gone into collections. I got phone calls from a law firm trying to collect from me. I asked for debt validation and all that I received from them was a copy of the latest card statement. This account had earlier been pursued by another collection agency, which gave up midway. Yesterday, I received a summons from court upon which I called the office of XYZ to enquire. The representative who picked up my call said she had no records since the account had gone into collections.

My question is, if they have provided the right documents in response to the validation letter that I sent them? I do intend to pay back the debt but right now have some financial problems. What should I do about the summons? Do I have a case in court?"

-James Barto

Solution: The first most important thing is to not ignore any summons from the court. Reply to the summons within the due date mentioned. If there is anything you want the court to know, you may mention it in your reply. Besides, you will also be given an opportunity to defend yourself in court. So, you may collect as much evidence to prove your point. The final verdict, however, will be given by the judge.

The law firm that tried to collect from you must be the CA that your Original Creditor (OC) sold the debt to. When you send a debt validation letter to a collection agency, they are required to send you:

• Written proof that they hold your debt and that the debt has been sold off to them.
• A statement of the payment history of your account till date. You can find out if there has been any extra fees charged, and if it has been, then how the CA has charged it.
• A copy of your original contract to prove whether or not you still are liable to pay off the debt. The CA may also provide account statements from your original creditor.

If the CA does not validate properly you have the right to provide that evidence in court. Tell the judge that you have not received proper validation for your debt.

If there is time after you send your response to the summons, you may call the CA's office and try and speak with them regarding your debt. If you intend to pay back the debt then speak with the CA and let them know about your situation. Tell them why you have defaulted on the loan but let them also feel that you sincerely wish to repay the debt. If you can arrange for some money, then try and settle the debt outside court. It may take you some time to convince the CA, but you should at least try. You will find more solutions to your credit related problems in numerous credit forums across the internet.