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The Importance of Debt Validation

By Janet Lacey
Published: Monday, March 8th, 2010

Many creditors find themselves in need of getting professional help from collection agencies to insure that payments from borrowers can be regularly collected. Some of these collection agencies are subsidiaries of the crediting companies, but some are private companies who happened to be in line with the business of debt collection.

Every day many borrowers and indebted individuals who have missed their scheduled payment period are bombarded with calls from debt collectors. These collectors usually employ different methods of making indebted individuals pay at least a part of their total debts. There are even those that threaten the credit reports of the indebted individuals. But there are those that attract payments through lower interest rates, flexible payments schedules and some even offer company gifts for those who would pay. No matter what style of collection is used by these collectors it is quiet often that they make an impression of putting legal and financial stress on the borrowers’ end.

To equalize the situation between the debt collectors, creditors and borrowers the federal government has passed the FDCPA or the Fair Debt Collection Practices Act. This law focuses on the possible wrong collection practices of collectors that make managing debt in the part of the borrowers more difficult.

Debt validation is the method being used by this law to help borrowers and indebted individuals from falling further in their already indebted situation. Debt validation is the process wherein the borrower checks the legality of the debt being charged to his account. This law seeks to prevent possible collection situation wherein the borrower is paying for a debt that he or she should not pay. The FDCPA covers all debt collectors and creditors, except for credit card companies.

Managing debt with the help of this law can be less confusing and easier to do simply because it gives a leeway for borrowers to inquire whether the debt payment being asked from them is legal and justifiable. This law also empowers borrowers to get better deals from their creditors because this law lessens the legal and financial pressure that can be used by creditors and their collectors.

Any call from a collection agency should first validate the debts that they are charging to borrowers. Before the collector can make any threat that concerns credit score and report, he or she must first provide proofs that he or she is making collections for validated debts. First, the collector must provide the actual written contract that the collection agency was hired by the creditor of the individual to make such calls.

The actual contract law of the agreement between the creditor and the collection agency will be used to validate the debt. If the collector was able to do so, the borrower should start thinking about his or her new managing debt plan because it is more likely that the debt will be validated. The collector should also provide account statements which can be dated back to the original creditor.

The computation of the amount being charged by the collector to the individual should be shown in the statement; if the collector is unable to do so then the debt cannot be validated. Lastly, collectors should also provide the original contract between the borrower and the creditor. If all of these can be fulfilled by the collector then his or her debt payment calls are valid and the borrower will be held accountable for his or her debts.

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