How to Challenge the Validity of a Debt

Challenge the Validity of a Debt
Challenge the Validity of a Debt

How to Challenge the Validity of a Debt. It's not uncommon to accrue an invalid debt or have an inaccurate credit rating because of a debt of which you weren't aware. Your credit report might also erroneously reflect an open or unpaid debt that you did pay because a creditor is lax in its reporting. No matter what the cause, you must challenge the validity of an undeserved debt to salvage your credit score and financial future.

Request proof. Contact the creditor directly and request copies of contracts, memos, bills of sales, invoices and purchase orders. Even if you have your own copies, don't assume that the creditors are the same.

Get it in writing. Request a letter that states balances, claims due, how they were calculated and the origin of all charges. Ask for detailed itemizations of the dates and nature of charges.

Send a "dispute letter." State your position in writing, including information that identifies your account and the transaction and how you expect it to be resolved. Send it certified mail and return-receipt to create a sense of urgency and provide you with proof that the creditor received notice of your dispute.

Read the fine print. If the creditor acknowledges your dispute and agrees to a settlement, don't sign anything that does not include terms such as withdrawal of a lawsuit and retraction of derogatory credit information.

Maintain your privacy. You are under no obligation to provide personal information to any bill collector or creditor unless you are under oath by a court order.

Hire an attorney. Creditors and bill collectors will avoid the legal process if possible and may consider a settlement sooner.

Monitor your credit report. Even after you reach a settlement, be diligent in making sure that the creditor retracted inaccurate information that affects your credit rating.

Tips & Warnings

  • Consumers have the right, under the federal law, to require bill collectors to provide validation for debts that they are attempting to collect. If you request validation, a collection agency cannot pursue legal action until the validation is provided to you by the creditor.
  • In a court of law, the burden of proof that you owe a debt is on the creditor.
  • Request that all communication from creditors or bill collectors be in writing then refuse to speak to representatives if one calls.
  • Keep a written log of all communications and conversations with creditors and bill collectors for your records.
  • When a creditor reduces or cancels a debt, the amount may be taxable to you. The creditor may send you a form 1099C that will show the reduced amount as income on your tax return.

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