Debt collectors validating debts provide proof that the debtor owes the debt and must pay. The proof is available in many forms, including a copy of the last bill sent on the account showing an unpaid balance. Validation is also possible if the debtor fails to challenge an original written notice about the debt from the debt collector.
Process
Debt collectors usually make initial contact about a debt by telephone. After that, the Fair Debt Collections Practices Act, a federal law, requires the debt collector to follow up in writing within five days. The letter states that the debt collector is legally authorized to collect a debt for a specific amount of money. The debtor has 30 days to challenge the letter by demanding verification of the debt. Validation is automatic if the debtor does not send a letter.
Strategy
A letter challenging the collection agency's claim protects the debtor's rights under federal law -- and buys some time. The debt collector may have to request billing statements or signed credit applications from the original creditor to complete the validation. The entire process could take weeks or months, giving the debtor time to decide what to do about the debt.
Response
The debt collector can resume debt collection efforts -- including the filing of a civil lawsuit -- after validation of the debt. Some people choose to ignore the debt while hoping that the agency will not sue. That strategy may work for small debts of a few hundred dollars, although a debt collector theoretically can sue for a debt at any amount. Usually, the higher the debt, the greater possibility of legal action. Ignoring a debt does not make it go away, although as of 2011 there are no precise standards for when a debt collector may sue. After validating the debt, the debt collector can pursue collection for the rest of your life.
Settlement
Debt settlement is one option for responding to valid debts. Most debt collectors will settle in a lump sum for less than the full amount due. SmartMoney reports that settlement of credit card debts is often possible for 20 to 70 percent of the balance. The Federal Trade Commission recognizes settlement as a viable solution for resolving debt.
Payment Plans
Debt collectors may also offer monthly payment plans. However, payment plans are usually for the full balance. Debtors who can't afford a lump sum settlement should agree to affordable monthly payments for several months while saving money for a settlement.
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