Obtain proof of debt from collectors before you pay
To Her Credit
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Steward Radio and other programs. See her website SallyHerigstad.com
for more personal finance tips and free budgeting worksheets.
Ask Sally a question
, or read her previous answers in the To Her Credit archive
Dear To Her Credit,
I sent a debt validation letter to a collection agency for
an account I had with a previous company. This collection agency responded by
sending me a letter stating that they had purchased the debt from a previous
creditor that was associated with my name, and they showed the last four digits
of my Social Security number. That's it! They did not send me the proof I was
asking for. What should I do next? -- Jennifer
That sounds like very thin "proof" indeed. If
that's all they have, you shouldn't send them anything. You have no way of
knowing if they actually own the debt. It's possible they are trying to collect
before they purchase the debt as that happens all the time. That's not enough
information to prove that they currently own the debt, however.
If a collection company really owns your debt, it should be
able to show recent statements on your account. The balance and activity should
match your records. They may also be able to show your application with your
Some states have even more requirements for what constitutes
validation of a debt. For example, new rules in Maryland require the collector
to show a listing of each prior owner of the debt, among other things. The trend nationwide is to require more information from collectors, who may have only the sketchiest information after
the debt is passed from one to another over time.
I'm surprised they even tried to submit validation when they
had so little. Most collection companies in that situation would simply move
on. Their time is money, and they'd rather spend their time on someone who is a
little less savvy, perhaps more easily intimidated. Apparently, they hoped you
didn't really know what debt validation is and gave it a whirl. It won't work.
Do not send the collector money or give them any more
information about yourself or your financial situation unless they can prove
they own the debt, how much you owe and that the statute of limitations has not
expired. The burden of proof is on them and if what they've sent so far is all
they have, they shouldn't get far.
In the meantime, it's important to check your credit report (you can pull it for free once a year from each of the three big credit bureaus
at AnnualCreditReport.com) and make sure this company isn't damaging your credit score.
If the collection company cannot satisfactorily prove that
it owns this debt, you should tell the company to stop contacting you. Send a letter
by registered mail. If necessary, write to the credit bureau and tell them you
do not owe this debt. Our debt collection sample letters can help.
If the collection company persists, you may need legal help.
You can go to a low-cost legal center, or you can look for a consumer lawyer
who provides a free pre-consultation. As thin as their evidence is, I wish I
could tell you to just ignore them. However, ignoring a collector is never a
good idea. Resolving issues like this as quickly as possible is one of the most
important ways you can take care of your credit.
See related: Know your rights: Fair Debt Collection Practices Act
Meet CreditCards.com's reader Q&A experts
Vexed by a personal finance problem? CreditCards.com's Q&A experts answer questions from readers every weekday. Ask a question, or click on any expert to see their previous answers.