Any time a debt collector initially calls you, it triggers a legal action that calls for a Dun Letter. This is a letter to you that describes your rights, who they are collecting for, the debt amount, the original creditor, etc.  You have 30 days to challenge the debt, and their right to collect on the debt.

The Dun Letter must be in your hands within 5 business days of their initial call, or contact with you.  Always challenge and validate. You may owe the debt, but it may not be to them. (Believe it: There is a lot of theft within and between debt Collection agencies).

They must deliver a debt validation letter to you, providing you with:

  • The name of the original creditor;
  • A pay history;
  • All the documentation;
  • The balance;
  • The date of last activity, which sets up the statute of limitations;
  • And some proof that the debt collector is, in fact, entitled to be paid for this debt (an assignment letter or a receipt of sale showing their ownership of the debt).

There is a recent book I wrote entitled Debt Collectors: Lies, Damn Lies, And Deceit. Click here to buy the book: DEBT COLLECTORS: LIES, DAMN LIES AND DECEIT

While the debt collector is investigating and collecting information, it can’t report anything adverse on your credit report or bring legal action against you.

A debt collector receives their book of business in one of two ways: (1) by Assignment, where a creditor (say VISA) contracts out with a collection agency to collect that debt; or (2) they purchase a book of business – hundreds, or even thousands, of collection items (some of which are real collection items and some may not be).

The larger debt collection firms (Portfolio, LVNV, and Midland, to name a few) will spend a lot of money on this book of debt and hope to collect some.

Let’s say they buy $2,000,000 worth of debt. The average a Debt Collection company pays for the book of debt is $.04 on the dollar.  If they collect fifty cents on the dollar, they have made a lot of money.

Also, remember that if you pay the debt, in any form or any portion thereof, two things can happen:

(1) It re-dates the item and it can stay on your report for another 7 years;  and (2) re-ages the Statute of limitations. (The Statute of Limitations vary by state, so check with your States’ Attorney’s General office).

A lot of times, a debt collector will not, or cannot, support their claims. If they cannot, they cannot collect, cannot call you, and cannot put it on your credit report. They cannot pass go, nor can they collect $200 (sorry, I could not pass up the reference to the game, Monopoly). Remember, a debt also has a statute of limitations – again, the date of last activity on that debt, not when the debt collector put it on the credit report!

According to the Federal Trade Commission, any creditor who can’t validate a debt:

  • Is not allowed to collect the debt,
  • Is not legally allowed to get in touch with you about the debt, and
  • is not allowed to report it to the credit bureaus.

(There is a recent book I wrote entitled Debt Collectors: Lies, Damn Lies, And Deceit. Click here to buy the book: DEBT COLLECTORS: LIES, DAMN LIES AND DECEIT)

If they do not send you a Dun Letter, or reports it to the Credit Bureaus ,this is a violation of the Fair Credit Reporting Act and the Fair Debt Collection Protection Act and gives you the right to sue, or file a claim with the Consumer Financial Protection Bureau.

Stand Tall, my friends.  Stand on my shoulders:  The view is better up there!

Let’s start a conversation.