So much stuff has been written advising people to get their debts validated. I’ve asked professionals and lawyers all over for a definition of what this actually means and until now, nobody really knew.
Was validation of a debt achieved if the lender simply acknowledged an account was present or did it require documentation of all transactions in the account? Who knew?
On March 2, 2012 the State of Massachusetts issued new guidance for debt collectors and original creditors. Buried in these rules is a section on the validation of debts that can serve as a guide on what it really means to validate a debt.
Here is what the state says the validation of debts is.
Validation of Debts
- It shall constitute an unfair or deceptive act or practice for a creditor to fail to provide to a debtor or an attorney for a debtor the following, within five business days after the initial communication with a debtor in connection with the collection of a debt, unless the following information is contained in the initial communication or the debtor has paid the debt:
- The amount of the debt;
- The name of the creditor to whom the debt is owed;
- A statement that unless the debtor, within 30 days after receipt of this notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the creditor; and
- A statement that if the debtor notifies the creditor in writing within 30 days after receipt of this notice that the debt, or any portion thereof is disputed, the creditor will obtain verification of the debt and provide the debtor, or any attorney for the debtor, additional materials described in subsection (2) of this section.
- If the debtor, or any attorney for the debtor, notifies the creditor in writing within the 30-day period described in subsection (1) of this section, that the debt, or any portion thereof, is disputed, the creditor shall cease collection of the debt, or any disputed portion thereof, until the creditor verifies the debt and provides the debtor, or any attorney of the debtor, by first class mail, the following materials:
- All documents, including electronic records or images, which bear the signature of the debtor and which concern the debt being collected;
- A ledger, account card, account statement copy, or similar record, whether paper or electronic, which reflects the date and amount of payments, credits, balances, and charges concerning the debt, including but not limited to interest, fees, charges or expenses incidental to the principal obligation which the creditor is expressly authorized to collect by the agreement creating the debt or permitted to collect by law;
- The name and address of the original creditor, if different from the collecting creditor; and
- A copy of any judgment against the debtor.
Pursuant to this section, the creditor must provide those materials described in subsection (2)(a) through (d) which are in the possession, custody or control of the creditor. If the creditor does not possess, have custody of, or control the materials described in subsections (2)(a) through (d), the creditor shall cease collection of the debt until the creditor has made reasonable efforts to obtain the necessary information and provide this information to the debtor.
Finally, Some Clear Guidance on Validating Debts
For me the most important section is the one that defines exactly what information is needed to provide a validation of the debts. Let’s look at that in a bit more details.
Required to Validate a Debt
All documents, including electronic records or images, which bear the signature of the debtor and which concern the debt being collected;
A ledger, account card, account statement copy, or similar record, whether paper or electronic, which reflects the date and amount of payments, credits, balances, and charges concerning the debt, including but not limited to interest, fees, charges or expenses incidental to the principal obligation which the creditor is expressly authorized to collect by the agreement creating the debt or permitted to collect by law;
That’s a fairly extensive list of documentation required by the State of Massachusetts but it is not unreasonable to expect a creditor should be able to provide you with this information.
It is important to note that if a creditor is trying to collect on a debt you believe is not valid then you must immediately write to the creditor, or collector and dispute the validity of the debt. You must do this within 30 days of being initially contacted.
You should send your letter by some traceable means so you have proof of delivery and the signature of someone who signed for the notification. You can do this through the post office by sending the letter certified mail and return receipt requested. It’s probably the least expensive way to accomplish this goal.
You don’t need to write a fancy letter, just write a letter saying you dispute the validity of the debt and you would like the collector to provide the following items:
- A copy of all documents which bear your signature.
- A detailed account statement that shows the dates of all payments, balances, and charges.
- Evidence of how the amount due was calculated.
- Any additional fees or charges that have been added to your account on top of the balance due.
If you would like to see a sample debt validation letter then read How to Dispute and Ask a Debt Collector to Validate a Debt.
If you happen to live in Massachusetts you can reference 940 CMR 7.00: Debt Collection Regulations statute.
If the creditor or debt collector cannot provide you with the requested documentation to prove the account and amount are true and accurate then take a copy of this article and the response from the collector or creditor to a local attorney and ask them to step in.