The Purpose of Disputing a Debt

Sometimes it appears to be too much trouble to dispute a debt. The dispute process often requires making several contacts with creditors, debt collectors, credit-reporting companies and others. Nonetheless, you can spare yourself future financial troubles by taking the time to dispute a debt, especially if you intend to apply for a credit card or loan.

Credit Files

The information in consumers' credit files is sold to creditors, insurers and other businesses by credit-reporting companies who use it to evaluate people's creditworthiness. The information in your credit file affects whether you can get a credit card or loan and whether you get favorable terms, such as a low interest rate. Therefore, it's important to correct errors listed in your credit report, such as a delinquent debt that isn't yours. Sometimes it's best to contact the creditor instead of the credit bureau that reported the error to resolve the problem. That's because the credit-reporting agency will contact the creditor to verify the debt when you dispute it, and the creditor likely will report the same misinformation.

Debt Collection

You should dispute a debt to stop the debt-collection process if a collector is requiring you to pay money you don't owe or is claiming you owe more than you do. A debt-collection company has to stop contacting you if you send a letter to the company that states you don't owe any or all of the debt. You should send the letter within 30 days of receiving the first debt-collection notice. However, the company can resume contacting you if it replies with documentation showing that you owe all or some of the money it's trying to collect.

Credit Reporting

The U.S. Fair Debt Collection Practices Act prevents a debt-collection company from reporting false information to a credit-reporting company. A collector is required to notify credit bureaus that a debt in your credit file is in dispute after receiving your dispute letter. An "in dispute" notation on the debt will remain in your file until the disagreement over the debt is resolved.

Verification Process

A debt-collection company should provide you with specific information on a disputed debt it claims it has verified you owe. The company should give you the name, address and phone number of the original creditor on the account. You also should get a listing of the payments you made on the account along with the interest rate and fees you've been charged if you believe you owe less than the collector says you do.