Debt verification vs. debt validation...

[treehugger1]

As more and more folks in financial crises learn their "rights" to request even simple information and more and more folks default on unsecured debts, I believe the CA's will have their hand's full.

I know I owe debts to creditors, but I still will ask for verification with any third-party collectors. A person owes it to themself to make sure the "t's" are crossed and the "i's" are dotted.

[treehugger1]

When a "new" CA calls always ask for the name of the person and the address. Document the date and time of call. If they continue to call, you might tell them you will look for their written notice per FDCPA. You might consider recording such a call.

I had accounts with 7 CA's a while back. One verified as they were local and I worked out a deal with them.

Two were not registered in my state, but a complaint to my state consumer finance division of teh attorney general's office shut them down.

I'm still struggling with making payments, even agreed upon ones, after 15 months. I still don't know if I will eventually file.

I could not pay everyone this month and will return to default on 3 - 4 accounts. They are all in the $800 - $1800 dollar range. I'm likely to let these go to small claims and allow a default judgment. I can afford 25% wage garnishment, so these would actually get paid off under garnishment.

I have some very large CC accounts $5K - $12K. If I have to default on these (again) then I'll probably have to wait for them to go to CA's and request verification and eventually a cease and desist commuications letter.

I have no other assets other than wages. I'm paid well and can live with judgments and future garnishments for a while.

The DV letters do seem to work.

[ssdsco]

[jp2861]

Like I already said, validation or verification, whatever you want to call it, is just a stall tactic by debtors, when they know the debt is truly theirs. The only time it really becomes important is when someone is trying to collect on a debt that you know, 100%, is NOT yours.

[HHM]

Having said that, since a particular debt was included and discharged in a bankruptcy, the CA or junk debt buyer is simply out of luck and are unable to collect on that particular debt since it would be a violation of the bankruptcy stay for that particular debt, correct?

Yes...if the debt is discharged, that is an absolute defense to collectability.

[chpxiii]

HHM, awesome! Thank you so much for weighing in on this and clearing things up.

The problem then becomes, under the context of bankruptcy because this is a bankruptcy forum and we are in the "Collection Problems" area, a CA or junk debt buyer can send you notice that you owe them money and if you ask for verification, all they need to do is send you your last statement - even though this debt was included and discharged in a bankruptcy.

Having said that, since a particular debt was included and discharged in a bankruptcy, the CA or junk debt buyer is simply out of luck and are unable to collect on that particular debt since it would be a violation of the bankruptcy stay for that particular debt, correct?

(I hope I made sense with my question.)

[HHM]

Let me take a stab at clearing things up based on my understanding...

First thing to clarify is "validation" vs "verification". These words are often used interchangeable, but refer to two different aspects of the FDCPA.

Validation, in terms of FDCPA, refers to the "Collections Agencies" validation notice that they must include in initial communications with the debtor. The validation notice is what informs the debtor that they have a "right" to verification. Validation is also an important word because as part of a "debtors" right to verification, they debtor must "dispute" the validity of the debt. But the debtor does NOT request validation of their debt, the debtor request verification.

As part of that "validation" notice, the collection agency must disclose the amount of debt owed and the name of the debtor.

So what is "verification". Unfortunately, the FDCPA did not fully define what constitutes sufficient verification, 15 USC 1692g(b). First and foremost, the debtor should make the request in writing, and in that letter, the debtor must say something to the effect of '"I dispute the validity of xyz debt." (you are not required to give specifics of your dispute, but, your reasons are important for purposes of what the CA must do in response to a verification of the request). The reason verification is a vague concept is that there can be many reasons for a dispute...the general rule for verification is that the CA has complied with verification if the information provided by the CA is "responsive" to the debtor's request.

Thus, a debtor cannot simply say, I dispute this debt, please verify. Unfortunately, even though you do not need to specify the grounds for your dispute (for purposes of kicking in certain provisions of the FDCPA related to verification, i.e. the CA must stop collection efforts while verification is sought), the debtor will need to specify what is required for the CA to verify. The FTC guidelines basically say that a CA would probably have to have the following from the creditor in order to respond to a verification request...itemization of the of the amount of the debt, the name of the debtor, a statement that the debt has not been paid.

In essence, all the collection agency need to do to verify a debt is show "something" that identifies the debtor, and identifies the amount owed. In fact, it was held in Spears v Brenna 745 N.E.2d 862 that a CA providing the original contract was actually "insufficient" to verify the debt...reason being, it did not indicate the amount owed and an accounting of the amount owed. For credit cards, the most recent account statement is probably sufficient to satisfy verification. Thus, even if the debtor specifically requests the "original signed contract" the CA is allowed to "editorialize" that request and send you something that accomplishes a similar purpose, i.e. that your name is somehow associated with the account in question.

Practical Advice...if you have collection agencies coming after you, you should ALWAYS request verification, but realize, that verification is largely an empty concept. Unless you actually dispute the debt, or are attempting to "really" bring an FDCPA violation action, all verification accomplishes is buy you a few weeks where collection activity must cease while the CA gets verification, once they have verified, regardless if the verification is sufficient, you are back to square one. CA's violate the FDCPA all the time, but the burden is on you to bring the action against them, so realize that unless YOU are willing to enforce your rights under the FDCPA, verification is a useless concept to you. Also, keep in mind that FDCPA claims, and other similar claims, are NOT defenses to you owing the debt, assuming the debt is legitimate in the first place (which is the case most the time), you still owe the debt regardless of how unscrupulous the CA's or Debt Buyer's become.

A note on chain of custody: it is not clear that CA's need to verify the chain of custody as part of the debt verification process, the chain of custody is raised as a defense to a lawsuit to collect the debt from the debtor.

[jp2861]

This isn't neccessarily correct. A lot of cases have been won by debtors raising a chain of custody issue on old debts. Does the party suing you have standing to sue?
You state that you don't have to prove you owe them. But, what would happen if you paid this current collection agency and a year later, another collector claimed you owed the same debt? This is a viable issue that needs to be determined at trial.
And, you've every right to wage an agressive defense. Can they prove the debt is yours and the amount they're suing for is correct? It's not a slam dunk as many debt collectors are finding out.

http://www.insidearm.com/forum/messa...&threadid=6714

I've been reading some of those threads too, and find it hilarious when a collector gets jammed up. I agree, it is tougher for them to prove the life of the debt when they get old. There's a myriad of different circumstances that could could put either the debtor or collector in a bind as a debt ages and changes hands. From my reading, it seems judges being either debtor friendly or creditor friendly being the biggest obstacle (or advantage). But, for the most part, validation is an easy task for CA's. For the purposes of folks that are recent in their delinquencies I'm sure the validation will be a no-brainer almost every time. My point was that a collector doesn't need to show that I had a contract specifically with them in order for them to have legal grounds to collect on it. All they need to do is prove the debt is mine and they have grounds to collect on it.

[FreshLikeADaisy]

Keepmine, every time I see you posting those creditor links I am so grateful -- I have learned SO much by reading them. Of course, I can't read too much at a time without the appropriate meds, they do tend to piss me off something fierce, but looking through those sites has been *quite* the education. Thank you!!!

[keepmine]

All they need to do is prove you owe the debt. They don't need to prove you owe "them". Debtor owes the debt and they are the ones collecting on it. Buying debt is not illegal and neither is attempts to collect. They may need to show where the debt originated from, but not that you ever had a contract specifically with them. If they had to show proof that you sepcifically had a contract with "them" then they would never be able to sue. But, that's a great idea and may put the brakes on alot of shady collection agencies, if it was ever made a law.

This isn't neccessarily correct. A lot of cases have been won by debtors raising a chain of custody issue on old debts. Does the party suing you have standing to sue?
You state that you don't have to prove you owe them. But, what would happen if you paid this current collection agency and a year later, another collector claimed you owed the same debt? This is a viable issue that needs to be determined at trial.
And, you've every right to wage an agressive defense. Can they prove the debt is yours and the amount they're suing for is correct? It's not a slam dunk as many debt collectors are finding out.

http://www.insidearm.com/forum/messageview.cfm?catid=9&threadid=6714

[Lindsay]

When Chase filed a lawsuit against us, we filed an answer with the court requesting validation of the debt. Since we defaulted our credit card number had changed and our Visa turned into a mastercard. About a month later, Chase sent an enormous envelope in the mail with photocopies of 5 years worth of statements on this account! Yikes, we haven't heard anything more but we're actually very close to filing now. I just wanted to buy some time. Chase never placed the account with an outside collection agency, I guess they have their own in house legal department.

[jp2861]

Exactly, and if they can't prove you owe *them,* the collection agency, which many times they cannot, then they need to cease collection of a debt.

All they need to do is prove you owe the debt. They don't need to prove you owe "them". Debtor owes the debt and they are the ones collecting on it. Buying debt is not illegal and neither is attempts to collect. They may need to show where the debt originated from, but not that you ever had a contract specifically with them. If they had to show proof that you sepcifically had a contract with "them" then they would never be able to sue. But, that's a great idea and may put the brakes on alot of shady collection agencies, if it was ever made a law.

[jp2861]

They can send you what their "legal counsel" suggests satisfies validation. Once they have dome that they can proceed with a suit. However, if you are a player and willing to hold them to task, eventually under discovery you can "answer" with a request for original contracts, detailed account info, etc. But, the FDCPA does not specify what constitute debt validation. However, I believe that in a court of law (no matter the judge) you can request they provide evidence that the original debt and contract belong to you.

In my opinion, if you know you owe the debt, what is the point in arguing? You might only add collection and/or attorney costs to an eventual judgment. There is some great advice on the credit and debtor boards, but some of it refers to what I deem to be nothing other than stall motions.

I'm no expert, so read my response as opinion only.

Cheers!

And when the Judge asks you, "Mr. Debtor does this debt belong to you?", the debtor will be under oath and answer accordingly, or risk getting caught telling a lie. The debtor will actually help the creditors case.

[tay666]

Yes. Many of the things people do are stall tactics.
Sometimes that is all you need.
Another month or two to get things in line so you can file BK.
If you can hold off a judgement by stalling, then why not?
Why pay that money for a month or two if you are going to BK it all anyway.

[treehugger1]

They can send you what their "legal counsel" suggests satisfies validation. Once they have dome that they can proceed with a suit. However, if you are a player and willing to hold them to task, eventually under discovery you can "answer" with a request for original contracts, detailed account info, etc. But, the FDCPA does not specify what constitute debt validation. However, I believe that in a court of law (no matter the judge) you can request they provide evidence that the original debt and contract belong to you.

In my opinion, if you know you owe the debt, what is the point in arguing? You might only add collection and/or attorney costs to an eventual judgment. There is some great advice on the credit and debtor boards, but some of it refers to what I deem to be nothing other than stall motions.

I'm no expert, so read my response as opinion only.

Cheers!