Debt Validation when a Collection Agency is working for a Junk Debt Buyer?

[Keebler]

First, a quick update...

I've gone months without making payments on nearly a dozen accounts that total in the six-figures. One is still current due to cross-collateralization and my desire to keep using vehicles and avoid reposession. Most of the others have been delinquent since the beginning and a couple recently became delinquent.

All have been turned over to third-party collection agencies and many have been turned over to more than one collection agency. A good chunk of the accounts are now placed with attornies and one has already sent an "Intent to Sue" letter.

We've got ongoing medical bills and expenses and we're trying to put as much of that behind us as we can before filing. I don't know if we'll make it another month this way but I still need to try.

It's not real clear but I'm convinced that a couple of accounts have been sold to junk debt buyers. I've already made a Debt Validation demand when I received the "Intent to Sue" letter to send the message "I'm not going to make default judgement easy so you shouldn't even try."

I also intend to send Debt Validation demand letters to the accounts that appear to have been sold to junk debt buyers. The confusing part for me is how the junk debt buyers have hired third-party collection agencies of thier own.

I'd like to demand proof of ownership of the debt in my validation letters but I can't figure out the wording of the demand. I know how to demand the name and address of the original creditor and I know how to demand proof of complaince with my state's laws governing debt collection companies.

What exactly am I demanding when I want proof of the ownership of the debt?

[HHM]

The only problem is, Debt Validation typically does not require that they prove to you that they have the right to collect (the law simply assumes that by nature of the collection activity). A DV response only requires that the CA identify the amount owed and the creditor.

Strictly speaking, if a CA is hired by a JDB, the only thing the CA need to do to satisfy the DV is to state the amount owed and the name of the JDB. Everything else is just pillow-talk unless you bring a lawsuit for FDCPA violations.

Keep in mind, for DV, it DOES NOT MATTER what you ASK FOR, all they have to do is comply with the law. And the law only requires that the CA identify the amount owed and the creditor.

[Keebler]

The only problem is, Debt Validation typically does not require that they prove to you that they have the right to collect (the law simply assumes that by nature of the collection activity). A DV response only requires that the CA identify the amount owed and the creditor.

Strictly speaking, if a CA is hired by a JDB, the only thing the CA need to do to satisfy the DV is to state the amount owed and the name of the JDB. Everything else is just pillow-talk unless you bring a lawsuit for FDCPA violations.

Keep in mind, for DV, it DOES NOT MATTER what you ASK FOR, all they have to do is comply with the law. And the law only requires that the CA identify the amount owed and the creditor.

I'm sure your answer is technically correct. But again, my goal is only to appear like I'm not the kind who will sit quietly by and let a default judgement happen if they choose that path.

The difficult part for me to accept is the fact that the information you say they are required to validate is the information that's typically on the dunning letter already.

[HHM]

The difficult part for me to accept is the fact that the information you say they are required to validate is the information that's typically on the dunning letter already

Well, that is the breaks of the game. The whole point of the DV response is to give the debtor just enough information so that the debtor knows who is trying to collect from them and for what. Doing so only requires the CA to identify the amount owed, and the original creditor. Also, keep in mind, the CA could give a shit about whether you are an active or passive debtor, so your intent to demonstrate that you won't sit by is a pointless intent and won't disrupt the collection time line. If anything, your plan will likely backfire, because it shows the CA that they have a live person at the other end, which makes you easier to sue.

In any event, FDCPA is generally pointless unless your actually prepared to sue. Lets assume that the CA did not comply with the DV, are you really prepared to sue them in federal court. In essence, and no offense, unless your ready to shit, you might as well get off the pot and start dealing with the debt directly.

[Keebler]

Well, that is the breaks of the game. The whole point of the DV response is to give the debtor just enough information so that the debtor knows who is trying to collect from them and for what. Doing so only requires the CA to identify the amount owed, and the original creditor. Also, keep in mind, the CA could give a shit about whether you are an active or passive debtor, so your intent to demonstrate that you won't sit by is a pointless intent and won't disrupt the collection time line. If anything, your plan will likely backfire, because it shows the CA that they have a live person at the other end, which makes you easier to sue.

In any event, FDCPA is generally pointless unless your actually prepared to sue. Lets assume that the CA did not comply with the DV, are you really prepared to sue them in federal court. In essence, and no offense, unless your ready to shit, you might as well get off the pot and start dealing with the debt directly.

I'm not sure what has your briefs in such a wad but I disagree.

There's every reason to believe that the collection process involves a review of several factors including a review of my income and assets and generally making a sound business decision regarding how best to recover some or all of the money I owe. Before a lawsuit is filed, someone will be answering the question regarding which strategy will result in the greatest recovery in the least amount of time with the least expense. I may not play a large role in that decision but my behavior does play a role. When it comes to responding to a lawsuit versus letting a default judgment happen, my actions will sure as heck impact the collections timeline. In fact, a judgment and a subsequent lien is the most expensive way for the creditor to collect exactly nothing for as long as I am willing to sit on whatever asset they get a lien on.

I've tied to politely explain my situation and I've obviously done a poor job. This is not a game for me and the whole thing is a colossal waste of my time and energy. As much as I'd like to deal with the debt directly and deal with it now, it's just not the best solution for my circumstances. There is, however, a clear benefit to avoid bankruptcy right now and that's why I'm here.

And yes, if a Collection Agency wants to be stupid and set themselves up for a lawsuit, I'm not above going after the opportunity. However, that too is secondary to my main goal and I'm not counting on it or even hoping for it.

[epiphany]

Well, that is the breaks of the game. The whole point of the DV response is to give the debtor just enough information so that the debtor knows who is trying to collect from them and for what. Doing so only requires the CA to identify the amount owed, and the original creditor. Also, keep in mind, the CA could give a shit about whether you are an active or passive debtor, so your intent to demonstrate that you won't sit by is a pointless intent and won't disrupt the collection time line. If anything, your plan will likely backfire, because it shows the CA that they have a live person at the other end, which makes you easier to sue.

In any event, FDCPA is generally pointless unless your actually prepared to sue. Lets assume that the CA did not comply with the DV, are you really prepared to sue them in federal court. In essence, and no offense, unless your ready to shit, you might as well get off the pot and start dealing with the debt directly.

Side question here....In my (albeit limited) experience, I have asked for three separate validations and not received one. I am not thinking lawsuits (although I will not hesitate to pull that card should I need to), but I seriously wonder why? Why do they just not send validation if it is as simple as a confirmation from the original lender that I owe the debt?

I am truly baffled.

ep

[keepmine]

Some of you guys really need to read the FDCPA.
HHM is correct. Nowhere in the FDCPA does it define validation other than, the name of the OC and the amount due.
Also, the FDCPA does allow for legal fees if you sue and win. That's why plenty of consumer lawyers will take a solid case on a contingency.

http://www.law.com/jsp/article.jsp?id=1036630505741

The Federal Debt Collections Practices Act permits award of attorneys fees even without a showing that a defendant is liable for actual or additional damages, a federal judge ruled Nov. 14.

U.S. District Judge John Bissell in Newark, N.J., assessed $16,257 in counsel fees against DRL Associates, a Hackensack debt collector that had sent out a dunning notice on which mandatory debtor-rights language was printed in a typeface so small that it was "virtually unreadable." In an earlier ruling, Bissell found that the letter violated the act, 15 U.S.C. 1692.


Here's an FDCPA opinion letters that get to the edge of defining validation. It's not binding but, can be considered persausive.

http://www.ftc.gov/os/statutes/fdcpa/letters/wollman.htm

http://www.ftc.gov/os/statutes/fdcpa/letters/cass.htm

The CAss letter deals with marking accounts as in dispute. Pull your credit reports and see if the collector has noted a dispute.

Here's a link to all the staff opinion letters. Many of them are helpful.

http://www.ftc.gov/os/statutes/fdcpa/letters.shtm

Also, don't forget the FCRA. Is the account reported correctly as to dates of first default and, does the amount listed as owed on the credit report match the total on the dunning letter.
Trick here is, you have to learn to use the FDCPA as a sword as opposed to a shield {a phrase from a pleading by a collection agency}if you really want to create some problems for your collector.



If you're going to play this game, {or do whatever it is you're doing} it's best to know the ground rules.

Ep,

Nothing in the FDCPA says they must validate. They just must stop collecting until they do.

Here's a suggestion for everyone trying to set up a CA for violations. Go to www.creditboards.com and do a search for the "1-2" punch.
I'm a bit pushed for time right now but later, I'll post a link to an FTC opinion letter that sort of defines validation-at least gives you a small peg to hand your hat on.

[ssdsco]

I'd like to demand proof of ownership of the debt in my validation letters but I can't figure out the wording of the demand. I know how to demand the name and address of the original creditor and I know how to demand proof of complaince with my state's laws governing debt collection companies.

What exactly am I demanding when I want proof of the ownership of the debt?

[HHM]

There's every reason to believe that the collection process involves a review of several factors including a review of my income and assets and generally making a sound business decision regarding how best to recover some or all of the money I owe. Before a lawsuit is filed, someone will be answering the question regarding which strategy will result in the greatest recovery in the least amount of time with the least expense. I may not play a large role in that decision but my behavior does play a role. When it comes to responding to a lawsuit versus letting a default judgment happen, my actions will sure as heck impact the collections timeline. In fact, a judgment and a subsequent lien is the most expensive way for the creditor to collect exactly nothing for as long as I am willing to sit on whatever asset they get a lien on.

Look, I am trying to give you a realistic picture of the playing field and trying to get you to think about the situation in terms of having you ask 2 questions. (1) what is my ultimate goal (2) will this course of action achieve that goal. You need to understand that what YOU BELIEVE and REALITY, on this issue are different things.

You claimed that by sending these letters your intent is to show: "I'm not going to make default judgement easy so you shouldn't even try", and what I told you is that you are wasting your time if that is your only intent. Now, sending DV letters have their place and I do recommend that anyone facing collections should do them, but nearly everyone who has come to this board and posted questions about DV's has wildly UNREALISTIC expectations about what DV's will accomplish for them, and for that matter, what the various consumer protections will do for them. But realize, from a collectors perspective, a DV letter tells them they have a live body at the other end...that suddenly moves you up the scale of collectibility (or yield).

You are correct, there are some factors that go into deciding to sue because you are correct, they would have to pay the filing fee...but the decisions is not as subjective as YOU BELEIVE. The decision is largely based on the amount, and based on the indicia in your file, the likelihood of recovery and the number of other cases in your jurisdiction. In the good collection law firms, the complaints and summons are auto-generated, and filed en masse every week at the court house.

As keepmine says, if your going to play this game, learn the rules, and be prepared to PLAY it (which means, be prepared to win it, i.e. be ready to actually file suit for a violation). I am not against a person playing the game...but you really need to ask yourself, is it your best interests to become a "professional debtor", or should you really be focusing your time and energy on a way to get out from under the debt? Otherwise, you appear to come-off as someone who is merely ignoring the root problem...the debt...and is trying any desperate thing they can think of to avoid the issue.

The best way to get a CA or JDB off your back is too simply research whether that agency is licensed to collect in your state, if not, then report them to your state attorney general. But if they are licensed, then you have to decide what your end-game is going to be.

Also, to clear up a few things.
1. Yes, an individual can sue in federal court without an attorney...however, by doing so, you are practically going in fully hog-tied.
2. Very few state collection protection laws give the individual a "private" right of action, it is typically the attorney general that enforces those laws. The FDCPA does give a private right of action.

[treehugger1]

i have requested several DV's in the past. A couple of times I received information that included a signature of the original creditor confirming the original debt with the CA and acknowledging that the CA had been assigned the debt. This was pretty solid DV. On the other hand, both CA's that bothered to DV were not registered in my state and a quick letter from the state AG's office shut them down. LOL.

Another CA I DV'd never contacted me again, and now the debt is in the hands of a CA completely across the country. I'll DV this CA within the 30 day window. WHile I believe HH is correct, my personal experience suggests that requesting a DV and then following this with a "limited" cease-and-desist (You may only contact me via US mail,) does seem to shut or slow much of the process down. Again, my limited sample size is not sufficient to form a general opinion, but in my cases, the DV request has led to results that fit my needs at the time.

There are several states that do allow for personal suits against state debt collection laws. Oregon is one of these. Legal fees are also allowed in the suit. If you really feel that a CA has violated your rights, in Oregon you can sue for the $1000 FDCPA violation and $200 for the state violation.

In terms of the OP, I do believe that no harm is done by requesting a DV. For the half-dozen situations where I have requested DV, my first sentence has always been I AM DISPUTING THIS DEBT. I then request a DV and make it clear that I will only communicate by US mail. There are plenty of letters to CAs out there on the net that suggest you throw in all kinds of other language, but in my opinion, the crucial line is to be quite clear that you are disputing the debt. "Disputing the debt does not necessarily imply you feel you don't owe any money, but you do set the scene that you are disputing the information in the dunning letter.

The real need for debt validation will arise if you are taken to court and you decide to embark on an answer and eventually discovery.

Bottom line is that if the debt is big, eventually some CA or JDB will attempt a suit.

[treehugger1]

My apologies for missing the last part of the original post. Why don't you simply call the CA and ask who owns the debt? If you're receiving letters from an attorney, call him/her and ask. Eventually you will know who "owns" the debt if you are sued. That should be the plaintiff. And...here is where I understand things begin to break down for some collection attorney firms. Proof of ownership and traking back to the original creditor may not be that easy, or worth the time/money to pursue if a debtor is going to put up a fight right into the courtroom.

If the debt is only an assignment and the collection attorney is representing the original creditor, all bets are off. I'm guessing there is not much to be gained by putting up a fight. JDBs and 2-3 3rd party changes in hand might be a different matter.

[HHM]

I don't want you to misunderstand what I am saying, I am NOT saying do not send DV's, nor am I saying that they have no use. But I am asking that you really think about an end game plan for the debt. DV's, at best, buy you some time (maybe)...they are not a solution to the underlying problem...the debt. Nor, in the long run, are they going to permanently prevent a suit or other collection activity.

My concern is, too many people harbor unrealistic expectations about the usefulness of the various consumer collection protections. The burden is ON THE DEBTOR to enforce those rights, if you are unwilling and unable to do so, you are essentially spinning your wheels.

[WhatMoney]

I tend to agree with the OP that a DV may alert the the CA or JDB that you are not necessarily an automatic default. They will still make the decision to sue based on what they think your assets are, if they are rational. If your public records look like you have assets and you never talk or respond or DV them, they will sue you hoping for a default judgment. I don't think they worry that you may be dead if you ignore them.

I only DV an in-state collection attorney, or an out-of-state CA that is licensed in my state and is threatening to sue. Otherwise I think it's a waste of time, since they have usually have little bite if they cannot sue in your state. (Yes I know about sister-state judgments, but that's not in their business plan.)

I have an in-state collection attorney after me now - he runs a default judgment mill, mostly hitting the small claims courts in all the counties around here, and hoping for default judgments. Judgeing from the courthouse records, he gets them at least 95% of the time! An easy and sleazy business - if defendent doesn't respond to the summons the county clerk recommends default and sends it to a judge for signoff, and it's done. The attorney doesn't even need to appear in court.

A DV might label you a "problem case" with these judgment mills, eg you know your rights. He may not bother paying the filing fee if there's any chance you might answer or appear for the summons. Most of this guys clients are JDB's that do not have the paper trail to prove their debt ownership in court - only phony hearsay affidavits and computer printouts.

Of course if you have assets to protect then you'd better just protect yourself with BK - since you are now fair game.

[ssdsco]

I know the CA's will do whatever they want but legally do they have to respond to a DV request before they can serve a summons ? Is it a defense if they don't respond to a DV request and sue you ? Is a FDCPA violation ?

Thanks

[HHM]

I tend to agree with the OP that a DV may alert the the CA or JDB that you are not necessarily an automatic default. They will still make the decision to sue based on what they think your assets are, if they are rational. If your public records look like you have assets and you never talk or respond or DV them, they will sue you hoping for a default judgment. I don't think they worry that you may be dead if you ignore them.

I only DV an in-state collection attorney, or an out-of-state CA that is licensed in my state and is threatening to sue. Otherwise I think it's a waste of time, since they have usually have little bite if they cannot sue in your state. (Yes I know about sister-state judgments, but that's not in their business plan.)

I have an in-state collection attorney after me now - he runs a default judgment mill, mostly hitting the small claims courts in all the counties around here, and hoping for default judgments. Judgeing from the courthouse records, he gets them at least 95% of the time! An easy and sleazy business - if defendant doesn't respond to the summons the county clerk recommends default and sends it to a judge for signoff, and it's done. The attorney doesn't even need to appear in court.

A DV might label you a "problem case" with these judgment mills, eg you know your rights. He may not bother paying the filing fee if there's any chance you might answer or appear for the summons. Most of this guys clients are JDB's that do not have the paper trail to prove their debt ownership in court - only phony hearsay affidavits and computer printouts.

Of course if you have assets to protect then you'd better just protect yourself with BK - since you are now fair game.

I think your making an illegitimate assumption about how this works. You have to understand the metrics of the collection industry. The whole issue is about yield and calculating what will return the highest yield. An interesting side note on yield, portfolios with accounts of less than $1,000 have a far higher yield than portfolios with accounts over $4,000. The number one factor for yield is actually knowing where the debtor is, (specifically), you can have all the default judgments in the world, but if you can't find the people (or their assets), you have nothing. When debt gets to the JDB stage, many of the accounts are ghosts because the information in the record is out dated. Thus, this is why the countless phone calls to anyone and everyone, letters sent to all known addresses etc.

Thus, when a CA receives a DV, in some sense, that is golden because now they have "current" information, there is a live body to go after, and that increases the chance of yield.

That does not mean you should not send a DV, but I really don't think it acts as discouragement. Or, at least not discouragement to a CA that has their stuff together. The thing is, many CA's and JDB's are just not that sophisticated and are run by people that can barely understand how their auto-dialer works, let alone sophisticated ways of calculating yields. And, as has already been pointed out, if they get a DV from a state in which they are not licensed, odds are they will drop that account.