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How to Dispute a Debt

Posted by Adam Alexander | Oct 06, 2021 | 0 Comments

If you receive a letter from a debt collector, the Fair Debt Collection Practices Act, (“FDCPA”), allows you a 30-day window to dispute the debt.  Your dispute must be in writing, and it requires the debt collector to take very specific action. This dispute letter is a very important tool for consumers. The letter should be simple and does not require you to know or cite any laws.  Here is a sample:

   YOUR NAME

YOUR ADDRESS

DATE

ABC DEBT COLLECTOR

ADDRESS

            RE: Account XXXXXXXX

Dear Sir/Madam:

Please treat this letter as a request for validation of the above account. I dispute that I owe the debt you claim I owe because (list reasons and attach documentation if applicable). I am requesting proof of the debt including:

-Complete payment history, including all payments allegedly made by me.

-Explain and show me how you calculated what you say I owe;

-Provide me with copies of any papers that show I agreed to pay what you say I owe;

- An itemized accounting detailing the transaction in an account that has led to this alleged debt  

Please refrain from attempting to collect this alleged debt until you have verified it as requested in this letter.  Please be advised that you are not authorized to contact me on my cell phone or at my place of business.

            Thank you for your kind attention to this matter.

Sincerely,

YOUR NAME & SIGNATURE

The above should be sent by certified mail.  Be sure to make a copy of your signed letter, as well any enclosures. Also, be sure it is sent within 30 days of the date you received the collection letter.

What Happens Next

Next, the debt collector can send you the requested verification. Or, they can do nothing at all.  Doing nothing is fine - as long as they stop attempting to collect the debt. It is unlawful for them to attempt to collect the debt unless they send the verification.

What is Proper Verification?

What is proper validation or verification of a debt for the purposes of the FDCPA? There is ample confusion among consumers regarding the legal requirements of a debt collector. I receive many queries about this issue and the discussion usually goes something like this:

“I disputed the debt in writing so that means they have to prove the debt before they try to collect the debt again, right? 

Or:

“Well, they received my validation letter and the only information in their response was the account number, the balance and the name of the original creditor. That's not proper verification!”

These ideas are misunderstandings of what the debt collector is obligated to do. Many of my clients are duped by false information found on the internet. In sum, debt collectors don't have to do much at all. The validation provision, (15 U.S. 1692g - Validation of debts), was created to ensure the debt collector provides very basic information about the debt they are attempting to collect.

Notice of Debt

The initial obligation of the debt collector is automatic. They must first provide notice of the debt. Within the “initial communication” to the debtor or with five days after the initial communication the debt collector MUST send the consumer a written notice containing—

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor

This is relatively simple and most debt collectors overwhelmingly find it easy to comply with this notice. (Conversely, there are some cases on the books wherein debt collectors do not comply with (3), (4) and (5) above). There are plenty of court decisions relating to this “initial communication”, but the focus of this article is on the subsequent verification.

Verification

Most consumer confusion involves what happens AFTER receiving the notice of debt letter.  The FDCPA indicates the consumer may dispute the debt, and request a “verification or judgment”:

If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this subchapter may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer's right to dispute the debt or request the name and address of the original creditor.

To summarize, if a consumer notifies the debt collector in writing within thirty days of receiving the § 1692g(a) notice that he/she disputes the debt or any portion of it, the debt collector must stop collecting the debt, or the disputed portion of the debt, and obtain verification of it and mail that verification to the consumer. (Bold emphasis added).

Three important points I want to note here: 1) If the consumer does not dispute the debt within 30 days of receiving the “initial communication”, the debt collector has no obligation to verify.  In other words, if the debt collector sends a second or third, etc. letter, this is not the “initial” communication.  2) The debt collector's failure to obtain verification within the allotted time frame does not make the debt disappear or otherwise invalidate the debt. It just means the that further collection attempts may be unlawful.

BUT MOST IMPORTANT IS #3:

WHAT CONSTITUTES VERIFICATION OR VALIDATION OF THE DEBT?

The answer to this question is not straight forward. Courts generally analyze this on a case-by-case basis. It turns out that the type of verification required depends on the type of debt, whether you actually owe it or some of it, and the jurisdiction you reside in. Different courts have slightly different answers, so here is a brief summary followed by a general “rule of thumb”.

In Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir.1999), the Court of Appeals adopted a very low standard for debt collectors: "Verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt." The Court also stated that a request for validation of the debt is primarily intended to eliminate such problems as collectors contacting the wrong person or attempting to collect debts which have already been paid.

Subsequent cases in many jurisdictions have expanded the debt collector obligation, but not significantly. In sum, the purpose of verification is to provide enough information to enable the consumer to “sufficiently dispute the payment obligation."  The amount of information required depends on the facts of a particular situation, but the relevant court cases seem to indicate that an “itemized accounting detailing the transactions in an account that have led to the alleged debt” is adequate.  See Haddad v. Alexander, Zelmanski, Danner and Fioritto, LLC. 758 F.3d 777, 785 (6th Cir. 2014), and Sawyer v. David A. Trott, et al.,Case No. 18-cv-13684.

United States District Court, E.D. Michigan, Southern Division, (March 27, 2019), where Defendant provided the mortgage and note, assignment, balance due and account activity.

More detail in the 6th Circuit is found in Scarbrough v. Rausch, Sturm, Israel, Enerson & Hornick, LLC, et al., Case No. 18-cv-10462. United States District Court, E.D. Michigan, Northern Division.

(November 9, 2018). Here, in response to Plaintiff's verification request, Defendant Rausch sent Plaintiff a letter which stated: "The original creditor is Synchrony Bank (Sam's Club personal Credit) and the current owner's name and address is CROWN ASSET MANAGEMENT, LLC, 3100 BRECKENRIDGE BLVD, STE 725, DULUTH, GA 30096. As of date of this letter, the current balance is $1,375.68." ECF No. 14 at PageID.143.

The Court concluded that the verification was insufficient under Haddad because it did not state what was purchased, where it was purchased, or when. In Haddad, the Sixth Circuit held as a matter of first impression that "verification" under the FDCPA (which is undefined in the Act) requires a debt collector to:

provide the consumer with notice of how and when the debt was originally incurred or other sufficient notice from which the consumer could sufficiently dispute the payment obligation. This information does not have to be extensive. It should provide the date and nature of the transaction that led to the debt, such as a purchase on a particular date, a missed rental payment for a specific month, a fee for a particular service provided at a specified time, or a fine for a particular offense assessed on a certain date.

Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC, 758 F.3d 777, 786 (6th Cir. 2014).786.

The Court also mentioned Haddad in denying Defendant's Motion for Summary Thebert v. Potestivo & Associates, P.C., et al., Case No. 2:16-cv-14341. United States District Court, E.D. Michigan, Southern Division, (August 18, 2017):

In short, by reciting the $125,000 loan amount and $106,777.03 principal amount, but not mentioning the prior-referenced debt amount of $115,267, let alone showing how that amount came to be, it is plausible that the Debt Verification Letter would mislead or deceive the least sophisticated consumer about the amount of the debt. See 15 U.S.C. § 1692e. Further, in attempting to collect $115,267 without providing in the Debt Verification Letter adequate information about how that amount came to be, Potestivo plausibly used a debt collection practice that was unfair to the least sophisticated consumer. See 15 U.S.C. § 1692f.[1]

However, the debt collector is not obligated to answer every question contained in your dispute letter. Nor is the debt collector obligated to always provide ALL transactions and a history of your account. The purpose of the request for verification is not to trap the debt collector so the consumer can avoid a legitimate debt. if you have a legitimate issue, (e.g. mistaken identity, identity theft, unlawful fees or interest, accounting or math errors), the debt collector must respond by providing enough information for you to resolve this legitimate issue.

A debt collector is not required to independently verify the existence of a debt, but may rely on representations of the original creditor as to its existence. Clark, 460 F.3d at 1174 ("[Debt collectors] were entitled to rely on their client's statements to verify the debt. . . . Moreover, the FDCPA did not impose upon them any duty to investigate independently the claims."). See also Chaudry, 174 F.3d at 406 ("[V]erification only requires a debt collector to confirm with his client that a particular amount is actually being claimed, not to vouch for the validity of the underlying debt"); Poulin, 760 F. Supp. 2d at 160; Ducrest v. Alco Collections, Inc., 931 F. Supp. 459, 462 (M.D. La. 1996); Azar v. Hayter, 874 F. Supp. 1314, 1317 (N.D. Fla. 1995), aff'd, 66 F.3d 342 (11th Cir. 1995); Wittenberg v. Wells Fargo Bank, N.A., 852 F. Supp. 2d 731, 753 (N.D.W. Va. 2012), aff'd sub nom. Wittenberg v. First Indep. Mortg. Co., 599 F. App'x 463 (4th Cir. 2013). Thus, in order to comply with its FDCPA obligations, PRA did not have to prove to Cooper that the debt was valid before continuing collection activities.

Credit Forum Gossip

If you are looking for information about responding to debt collection or addressing credit reporting problems, be leery of “advice” you find online.  Although you may find some helpful information on credit forums and debt collection forums, you must understand these well-meaning folks are not authorities on the law.

Don't let credit forum contributors be the source of your knowledge about the FDCPA. Like other “information” you may encounter on the internet, postings regarding collection laws are not necessarily factual.  Do your research and locate multiple sources to double check conclusions you find about any law or legal interpretation. Or better yet, consult with an experienced FDCPA lawyer before you begin communicating with a debt collector.

About the Author

Adam Alexander

I was born to solve problems and with an innate ability to separate right from wrong. I turned these virtues into a career focused on fighting corporate overreach and deception and representing consumers who are wronged.  Since 1996 I have helped thousands of Michigan residents fight back and pro...

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