Three Elements to Validate Credit Card Debt and Get Rid of It

This is so important that someone has to mention it now!

If you have unmanageable debt and must get rid of it, make sure you know all your options. Consumers are put into the corner due to overwhelming credit card debt. Foreclosure and bankruptcy is at its all time high; there is not enough money around for everybody to pay the big banks and often consumers have to rob Peter to pay Paul. Becoming educated is the only solution that could solve dire situations against ballooning debt.

One option you have is debt validation. If you have already fallen behind and are dealing with third party debt collectors, make them validate the debt and prove that you really owe them money. There are laws that apply to debt validation and it is an excellent weapon against third party debt collectors. Make sure that the third party collection agency has the right to collect money from you first before you pay them.

You might want to ask the debt collectors to provide these three elements to validate the debt:

1. Prove that a contract exists. Ask for proof that the collection agency owns the debt or has been assigned the right to collect the debt. There may be a contract between the collection agency and the original creditor, but that does not mean there is a contract between you and the collection agency. Indeed there is no contract between you and the collection agency and their collection attempts are an effort to get you into a new contract. Once you send them one cent they have a new contract.

2. Provide an account statement. The debt collector should have an account statement that show exactly how the collector has come up with the amount of money it is trying to collect from you. Here is a case law you might want to look at regarding the account statement Fields v. Wilber Law Firm, Donald L. Wilber and Kenneth Wilber, USCA-02-C-0072, 7th Circuit Court, Sept 2004.

3. Provide a signed loan agreement or copy of the original credit card application. this is optional because if the debt collector has provided an account statement from the original creditor then this requirement is fulfilled.

Debt collectors usually get paid a percentage of the amount they have collected. They can also make money by pocketing the difference between the amounts paid to purchase the debt and the amount collected from the debtor this applies to junk debt buyers.

Be aware that if your contract with the original creditor says “debtor agrees to be responsible for payment of this debt to creditor or its assignees” this means you might need to negotiate or to settle the debt for a lesser amount.

The Fair Debt Collection Practices Act (FDCPA) says that it is your rights to validate your debt and that the creditor must show proof that you owe the debt. There has to be actual documented proof and not some kind of a computer printout.

The FDCPA says the creditors are not allowed to collect the debt if they cannot verify that you owe the debt, and they are not allowed to contact you about the debt or to report the debt information on your credit report. If this information is reported on your credit report then it is a violation of another law called the Fair Credit Reporting Act (FCRA) and you can sue them for $1,000 in damages due to violations of these laws.

Traditional debt relief programs might not work for every situation. If you are drowning in debt, it is vital that you seek information on debt validation that you can do on your own. There are also professional debt relief help programs that use debt validation or debt forgiveness strategies if you do not want to do it on your own. These are law based programs that can legally get rid of the debt, or even cancel them.