You've opened your mail and at the top of the pile is something called a "debt validation letter." Sounds pretty official, right? But what does that mean and how do you respond if you receive one?
In this article, you'll learn about the ins and outs of this document so you can be confident in knowing what a debt validation letter is, your rights as a recipient, and possible next steps you can take.
What is a debt validation letter?
Here's a quick scenario: Imagine you have a credit card and due to financial hardship you're not able to pay the minimum balance for a couple of months. To recoup its losses, your credit card company may choose to send your debt to a debt collection agency — a company that works to recover unpaid debts. The collection agency will then reach out to you about paying back the balance.
That's where the debt validation letter — also known as a debt collection letter — comes in. It's essentially an official notice that you now owe your debt to the collection agency, and they want payment. By law, agencies are required to send these letters to make sure you, as the borrower, understand how much you owe, when your payments are due, and how you can dispute any claims.
So how long do you typically have before a debt moves from the validation stage to collections? This answer usually varies depending on the debt collector. But if the debt is not disputed within 30 days of receiving the validation letter, full collection efforts can proceed. If you do dispute the debt, according to the
Consumer Financial Protection Bureau (CFPB), collection activity must be paused until the debt is confirmed and you are sent the debt verification details.
What's in a debt validation letter?
The document should include the following information about your debt — according to the
CFPB:
Who the letter is from. There should be a statement on the communication that clearly says it’s from a debt collector.
Your name and mailing address. Your details should be on the letter, along with the name and mailing information of the debt collector.
The original creditor’s name and details. Debt collection agencies typically collect on behalf of another company, like a business or financial institution. You have the right to know who your original creditor is and what type of debt you owe (loan, line of credit, credit card balance, etc.)
Total amount owed. This includes an itemization of your total debts, including fees and interest. Double-check all of these details to make sure there aren't any errors.
Account number (if applicable). A reference number helps to confirm the debt and provides a way for you to check back on the claim in the future.
Contact information. These are the details you can use to reply to the debt collector; for instance, if you believe the debt’s not yours or the amount is wrong.
Statement of the right to dispute. You have 30 days to dispute the claim, so you should review your letter as soon as possible. If you don't respond by the 30-day window, the debt collection agency will assume the debt is legitimate, making it difficult to dispute or correct it in the future. In addition, unpaid debts can harm your
credit score, making it more difficult for you to borrow in the future.
Response date. This would be the end date for a 30-day period during which you can dispute the debt.
Other information may be included on your debt validation letter, but the information listed above is generally required. If any of these details are missing, you can file a complaint with
the CFPB.
What's the purpose of a debt validation letter?
Let's break down the specific reasons why a collection agency is sending you this notice. As unwanted as this letter may be, having this information in writing serves your best interests by:
Outlining the specifics of the claim. Collection agencies and creditors may contact you in a variety of ways, including phone calls, emails, or balance statements. But a debt validation letter is there to make sure you have a written record of how much you owe, when the payment is due, and how to make the payment. It's important to emphasize that this isn't just a courtesy letter — it's legally required under the Fair Debt Collection Practices Act (FDCPA). If a collection agency doesn't provide this information, they can't legally try to collect from you.
Giving you a chance to dispute the claim. Having all of the information in one place allows you to confirm that the collection agency has the correct details for your debt. Make sure to read through the letter carefully. Are they listing a debt you truly owe? Have you already made a payment? Are the interest rates, fees, and balances accurate? If you've received a validation letter for a debt you don't owe, someone may be fraudulently racking up debt in your name. This letter is a red flag for you to quickly respond by disputing the claim and taking steps to make sure the scammer doesn't acquire more debt in the future.
Note: It's a common scam for a caller to pretend to be from a collection agency and request sensitive information from you. Never give personal or financial information to a debt collector over the phone. If you're not sure, ask the caller to provide their name, company, address, and phone number. Then confirm the information online first.
How can you request a debt validation letter?
If a collection agency tries to collect from you without a debt validation letter, it's within your right to send them a formal request for proof of debt. Here are some recommendations when requesting a debt validation letter:
Use certified mail. Providing your request through certified mail means you have proof that you sent the letter to the collection agency, protecting you down the road.
Request by phone. If you’re unsure of the debt collector’s mailing address, you can request a debt validation letter when they contact you via phone to collect the debt. You also might want to ask about recording the call so you have a record.
Ask for contact information and proof of debt. This is where you ask the collection agency for the specifics of the alleged debt. In your letter, give a detailed list of all the information you need, including:
Contact information of the creditor
Contact information of the collection agency
Copies of the original debt agreement between you and the creditor, and the agreement for the collection agency to assume the debt from the creditor
Detailed outline of the debt balance, interest charges, and fees owed
Complete history of the debt (the date you assumed the debt and a record of any payments you have made)
Keep a record of all communications. Before you send your letter to the collection agency, save a copy for your files. Keep records of all communications in one place — save letters, emails, and notes from phone calls — in case of a dispute.
What are the next steps after receiving a debt validation letter?
When you receive a debt validation letter, there are four actions you can take:
1. Confirm the debt and make a payment
If you've reviewed all the provided information and everything is correct, contact the collection agency about making a payment or exploring your options if you are not able to pay upfront. The collection agency may be willing to
negotiate or forgive the amount you owe to avoid extra legal and administrative costs.
2. Dispute the debt or correct the information
If the information is incorrect and you would like to dispute the debt, send a certified letter back to the collection agency within the dispute period explaining why you're not responsible or what details they need to review. Not sure what to include in your letter? Visit the
CFPB website for samples you can use.
3. Report bad behavior to the FDCPA
Even if you owe a debt, remember that you have legal protections under the FDCPA. If the collection agency isn't complying with FDCPA standards, including not giving proper information about your claim or harassing you about payment,
report it to the CFPB.
4. Seek trusted advice
If you're experiencing financial hardship and feeling overwhelmed or unsure about how to proceed, don't hesitate to get some help. Ask a trusted adviser, such as a credit counselor or legal adviser, for guidance on how to move forward. You may also want to explore options like
debt consolidation and
payday loan consolidation.
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Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.
This Blog was sponsored by EarnIn. While the author received compensation, the information shared is grounded in independent research and intended to provide helpful and accurate guidance to readers.
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