A new client has hired you to help him increase his credit score and to figure out a plan for repaying some debt. He tells you that a debt collector called last week wanting payment - but your client doesn’t think that he owes the amount requested. Now what?
Requesting debt validation is a common part of the credit repair dispute process. With the right instructions and letter templates, debt validation letters can be quick and simple to write. Read on to learn more about debt validation and tips for writing the request.
Why Does an Unverified Debt Matter?
If your client has been contacted by a collector about a debt that doesn’t belong to him, one he has already paid, or a wrong amount, then you need to write a letter to the collector - on your client’s behalf - requesting that they validate the debt.
Collectors must prove a debt belongs to your client.
To verify a debt, collectors must send documentation from the original creditor showing that your client owns the debt and the full amount owed.
If the debt can’t be verified, then it must be removed from your client’s credit report.
Reasons your client’s debt may be unverifiable:
- An error - the debt was put on your client’s account by mistake
- Lack of documentation - no record of your client’s contract with the original creditor
- Authority - the collector has no legal authority to collect the debt
- Time - after seven years a past due balance cannot be reported to the credit agencies
Debt Validation is Time-Sensitive
Debt validation requests are time-sensitive. Your client’s request for verification of their debt must be in writing and it must be received by the collector within thirty days from their first contact with your client.
If the collector contacts your client and does not receive a letter requesting validation of the debt within thirty days, then the collector has the right to assume the debt is valid and can continue seeking payment.
What Can a Debt Validation Letter Do For My Client?
Wonder if requesting debt validation for your client is the right step in the the credit repair process? Here are some things that sending this letter can do for your client:
- Makes sure your client doesn’t pay a debt that isn’t his
- Makes sure your client hasn’t already paid the debt
- Makes sure the creditor is authorized to collect the debt
- Makes sure your client pays the correct amount
Tips For Writing a Credit Repair Business Debt Validation Letter
Once you and your client have determined that requesting validation of their debt is the best plan of action and have made sure you are within the thirty days of initial contact, you are ready to get that letter sent out:
- Use a template: there is a ready-made debt validation letter template here
- Write the letter on behalf of your client: include your client’s personal information and a copy of your client’s identification
- If it is after thirty days of the initial contact, you can still request debt validation for your client - however, the collector is not legally required to comply
The debt validation letter should request:
- The identity of the debt collector, including their address and phone number
- Proof that the debt collector has legal authority to collect the debt
- The name, address, and phone number of the original creditor (if not the one who contacted your client)
- The full amount of the debt, including any fees such as interest or collection costs
- What the debt is for and when the debt was incurred
The Collector’s Response: Verified or Not
Once your client receives the debt collector’s response, you and your client can decide what action to take next. This next step will depend on the particular circumstance and what the collector’s response was to the debt validation letter.
What if the debt is not verified?
If the collector cannot verify the debt - the debt is incorrect, already has been paid, or there is no paperwork to prove it - it must be removed from your client’s credit report. If the collector does not immediately do this, then follow the steps for disputing a debt.
What if the debt is verified?
If the collector sends your client verifiable proof that the debt does belong to him, then discuss the options for paying off the debt with your client. In order to succeed in repairing your client’s credit, you will need to negotiate directly with their creditor.
If your client is able to pay the amount in full, then you can negotiate directly with the creditor and request that the negative mark be taken off your client’s credit report in exchange for payment in full.
If your client cannot pay the full amount, then you can request that the interest your client pays be reduced as your client works to pay off the debt.
For more creditor negotiating tips go here.
To get Credit Repair Clouds’ debt validation letter template go here.
