After a creditor has exhausted all attempts to collect on a past due account, they typically turn the account over to a collection agency. Some collection agencies work on a percentage of the money recovered, and some buy the debt outright for a much reduced price.

It’s not uncommon for one collection agency to sell an account to another agency, when they have been unsuccessful in collecting the debt. So the history and status of a collection account can become blurred, distorted or lost over time.

In some cases, a collection agency will attempt to collect on a debt that has already being paid or one that was discharged in bankruptcy. Or, you may be contacted about a debt that does not belong to you, or one with an amount different from what you actually owe.

Validation Means Proof

Before you pay a collection agency any money, you should validate the debt. Essentially, validation proves that you did have a legal contract with the original lender, that you do owe the amount the collection agency says you owe, and it is confirmed that the collection agency is authorized by the creditor to collect the debt.

How to Validate

When a collection agency takes over your account, they will first mail you a written notification of their intent to collect on the debt. In that initial mailing, you should be provided with instructions on how to request validation of the debt from them.

Put your validation request in writing and mail it to the collection agency by certified mail within 30 days of receiving their notification. The agency then has 30 days to provide you with proof that:

  • They have been authorized by the creditor to collect the debt
  • You had a legal contract with the original creditor (usually a copy of the original contract)
  • You owe the amount they are requesting

If the collection agency does provide the evidence listed above within the 30 day time line, you will be obligated for the debt, and they are allowed to proceed with the collection within the limits of the law.

If they do not provide you with this proof within 30 days, they are required by the 1978 Fair Debt Collection Practice Act (FDCPA) to cancel the debt and discontinue collection proceedings against you.

If they do not respond to your validation request, but continue to attempt the collection of the debt, your next step is to submit a written letter to the three major credit bureaus – Experian, TransUnion, and Equifax – explaining that you are disputing the collection activities of the agency. Also, send notification to the agency alerting them that they have violated the FDCPA and that you will take further legal action if they do not cease their collection activities.

Remember you only have 30 days from your receipt of the original notification to request validation of the debt. If you wait past the deadline, the debt will be considered valid and you will be required to pay it

Go here for an expert’s advice on the best way to validate your credit files.