My office receives many inquiries regarding a debt collector's activities after the alleged debtor sends a written dispute to the debt collector. Indeed, my office brings many federal lawsuits that include allegations that the debt collector violated the Fair Debt Collection Practices Act ("FDCPA") in relation to a consumer's right to dispute the validity of the debt.
Many debt collectors, unfortunately, attempt to keep the exact nature of the debt hidden from the consumer - often contacting the consumer by telephone and demanding an exhorbitant amount, and then offering to "settle" for significantly less. Meanwhile, the consumer is left wondering what the debt is for, whether this particular debt collector has the legal right to collect the debt, and whether the amount being claimed is actually owed.
Fortunately, several provisions of the FDCPA provide the consumer the opportunity to learn more about the debt before agreeing to make any payment. The importance of proceeding with caution with a debt collector cannot be overstated. If you actually owe the debt collector the amount owed, there should be no resistance to your request for detailed information about the debt. Unfortunately, that is rarely the case. Be aware that if a payment is made of any kind within the statute of limitations (four years in California), that can begin another four year period, meaning it extends by another four years the time within which a lawsuit can be brought to collect the debt. If any sort of new agreement is made after the statute of limitations has expired (meaning the debt cannot be legally enforced), a new period of four years may begin.
Section 809 of the FDCPA (15 USC 1692g) provides as follows:
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing--
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer's written request witin the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
This provision means that it is a violation of federal law for a debt collector to continually contact a consumer by telephone without providing the required written notice described above. If you have been contacted by a debt collector and have not received the required written notice, contact a consumer attorney who handles debt collection matters for a consultation. California residents can contact my office. Consumers outside California can visit the National Association of Consumer Advocates to find an attorney in their state.
Let's assume a written notice is sent containing the required information. It should be noted that the validation notice cannot be "overshadowed" by the debt collector's collection activities. Thus, demanding immediate payment (e.g., within ten days) or threatening to file suit in a manner so strongly as to suggest that the collector will not cease collection efforts while validating the debt pursuant to the consumer's request in the same letter as the notice misleads the consumer about his or her validation rights and violates the FDCPA.
If the consumer now sends a written dispute to the debt collector (which should be done in a manner by which you can prove the debt collector received the written dispute - I recommend both faxing with a printed fax receipt and sending a copy by certified mail, return-receipt requested), Section 809 (15 USC 1692g) provides the debt collector must cease collection activities:
If the consumer notifies the debt collector in writing within the thirty-day period . . . that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion therof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
In short, the collector must halt all collection activities (including initiating a collection lawsuit) on the date it receives the request for verification, and may not begin collecting again until it mails verification to the consumer. Thus, it is very important that consumers exercise their right to validation, even if they believe it likely they owe the debt.
A debt collector that violates the FDCPA by failing to provide adequate or any validiation rights notice, or overshadowing that notice with collection activities, or continuing collection activities after a timely, written dispute from the consumer is liable to that consumer for actual damages, statutory damages, and any attorney fees and costs. If a resident of California, contact my office for a free consultation. Residents outside California should visit the National Association of Consumer Advocates to locate an attorney in their state.