Consumers should look at a debt collector who is trying to collect a debt from them with skepticism. As debts are bought and sold by third party debt buyers, errors can be introduced into the process, meaning that people can be targeted for collections who do not owe money. Sometimes, the collections process progresses to a lawsuit against a consumer, when the debt has not been verified to have been accurate.
Requesting Verification
A consumer can request verification of a debt from a collector who contacts her attempting to collect a debt. She must write to the debt collector to request proof that the debt is valid and the reasons why she owes the debt. Many debt collectors will have difficulty providing this information but will still proceed with aggressive collection of the debt. If the creditor provides verification that the debt is valid, it will probably move forward with collections efforts if the consumer does not pay or make arrangements to settle the debt.
Debt Not Verified
A collector is under no obligation to offer debt verification to a consumer if the consumer did not request it. A collector is likely to assume the debt is valid if it does not hear from the consumer within 30 days. The creditor will probably continue with collection efforts, and may eventually sue the consumer. A court will probably want verification of the debt, particularly if the consumer asks for it during a court appearance, which may make it difficult for a collector to win a lawsuit for collections.
Third-Party Debt Buyers
Verification of debt is often difficult for third-party debt buyers. Many times, a debt will pass through multiple collectors, as the original creditor or a debt collector sells the debt to other parties. Consumer debt is often purchased in portfolios, or large groups of debt, for pennies on the dollar. Many times, the identifying information for the debt doesn't transfer with the sale, so the collector may have difficulty verifying the debt. The sales process can also introduce errors, from incorrect balances to people being named as debtors who do not owe the money.
Debt Information
In a memo to the Federal Trade Commission regarding ways the FTC can protect consumers facing debt collection actions, Consumers Union staff attorney Lauren Z. Bowne states that all consumers and debt collectors should provide information proving a debt is valid. This information is divided into two parts: baseline and baseline plus. Baseline information includes the amount of the debt and name of the original creditor, as well as an itemization of the balance, including fees and interest charged. Baseline plus information goes further and includes a signed contract by the consumer and detailed information about the charges and payments made on the debt. Baseline plus information should also include the chain of title if the debt has been sold.
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