There are several letters that you’ll want to
become familiar with. The most important being a cease and desist and
validation of debt letter. When a collector receives one of these, they know
you mean business. The reason I’ve dedicated an entire chapter to these two
particular letters is because they’ll be your saving grace in the end!
Collection agencies and law firms know all the loopholes on debt collection
better than consumers. That’s a fact. However, by the time you’re done reading
this chapter you’ll be unshakable.
Cease and Desist Letter
Q: What is a cease and desist letter and what does
it do?
A: The concept’s pretty simple, it’s a letter
requesting, or demanding (up to you) that the creditor STOPS communicating with
you. Sometimes a cease and desist is necessary, especially if a collector’s
calling you five to ten times a day.
Depending on whether the collector’s calling you at home, or at work, there are different rules that apply. Allow me to break them down for you:
• If a collector is calling you at home or on your cell, you must give them a written request to cease communication.
• If a collector is calling you at work, you can verbally request that they stop. You don’t need to write them a letter. Simply inform them that you aren’t allowed to receive calls at your place of employment.
Sounds easy enough, right? Some consumers have expressed that they feel a little guilty sending a cease and desist letter because they know they owe the debt. Let’s clear one thing up. Yes, you may owe the money! However, this doesn’t mean you have to be a punching bag while the collector calls repeatedly throughout the day, this is intimidation and harassment. Collectors are generally allowed to call a consumer two to three times a week. If you’ve repeatedly told a collector not to call you and they continue, then you should absolutely send this letter; especially if your job is in jeopardy as a result of the phone calls.
There are times when a cease and desist letter doesn’t work in your favor. Please don’t send a cease and desist unless you absolutely have to. Some collectors may get angry upon receipt of your letter, as it makes their job of collecting that much more difficult. If they’re unable to contact you via telephone, their only option might be to send your account to a law firm for possible legal action; or send it to another collection agency.
NOTE: I’ve run across a few articles online that claim if you send such a letter, your account will immediately go legal; what a general statement! There are variable factors with anything. So, keep in mind that it’s always a possibility, not a solid fact.
If you’re merely trying to get the calls to stop but are ok with receiving mail, write that in your letter. You can be as rigid or airy-fairy as you wish. Realize that avoiding your creditors is not the way to get out of debt. You’re going to HAVE to communicate with them if you want to settle your account or set up a payment arrangement. A cease and desist should only be used when you’re being harassed with excessive calls at home, on your cell, or at work.
A common misconception that consumers have is thinking that ALL collectors must comply with a cease and desist letter. This is not the case. The original creditor can still contact you even if you’ve sent them the letter. You can send it anyway, but if they continue to call you, it’s their right. Original creditors aren't bound by the FDCPA laws.
When mailing a cease and desist, always mail it
certified or some other courier service which requires a signature from the
receptionist or end user. That way you have proof your letter was received.
If you threaten to send a cease and desist, the collection agency may not readily give their address. You can either call back and ask someone else or try doing a quick search online. Some collection agencies can be very sketchy; those are generally the ones that violate the FDCPA in the first place. It could be one guy operating out of his home or garage. When you think about it, starting a debt collection business is pretty easy; purchase some old junk debt for pennies on the dollar, hook up a phone and start calling. Good luck speaking to his supervisor or a receptionist. Getting the address from these folks might require some skill.
If a collector disregards or ignores your letter and continues to contact you, then you should absolutely file a complaint with one, or all, of the agencies I mentioned in the letter. I go over how to file complaints against a collector at the end of the book. No one has the right to harass you, not matter who they are or what their company title is. If a complaint isn’t what you’re looking for, take matters into your own hands and sue the dang collection agency! It’s your right as an American. The FDCPA allows a $1000 fine for each violation. But, if all you want is the phone to stop ringing, without the need of a cease and desist, you can always change your phone number or handle the account for good.
Validation
of Debt Letter
“VOD” stands for validation of debt letter. This
one letter is your ultimate weapon. Debt validation is exactly what it sounds
like. It’s the process in which you request the creditor to provide proof that
you, in fact, owe the debt. There’s a sequence to this.
When a collection agency initially receives your account they must send a 30 day demand letter. According to the FDCPA every debtor is entitled to request proof that they owe the debt and that the collection agency is legally able to collect it. Many debtors don’t know this, however, this letter could mean the difference between losing or winning that debt related lawsuit. Yes, it’s that important.
PLEASE NOTE: The original creditor does NOT have to comply with a validation of debt request, only a collection agency or debt buyer must abide by the FDCPA rules.
You should consider sending a Debt Validation Letter if you encounter any of the following:
·
You have no knowledge of having accrued the
referenced debt
·
The dollar amount they claim you owe appears
higher than it should
·
The debt is on its second, third, or forth
collection agency
·
The debt is past the statute of limitations
according to your state
Why is it important to request proof that you owe
a debt? For
one, the creditor must cease any collection activity during the dispute period.
Second, if the creditor is unable to provide the documentation requested, they
must cease any further collection activity and remove their marking from your
credit report. YES, you read that correctly. This is key. For example, if you
recently received a collection letter from a law firm, you risk the possibility
of a lawsuit. However, if you send them a VOD letter and they’re unable to
provide the proof requested, in most cases, they’ll send your account back to
the original creditor or debt buyer. This could save you from a lawsuit. Here’s
an example:
Let’s say you borrowed $100 from John. You promised John that you’d pay him back in a month, but six months has gone by, and you haven’t made a payment. One day, you receive a call from Bob. He claims he’s a friend of John’s and was hired to collect the money from you as John is out of the country on business. Hmmm…now I don’t know about you, but I’d want to know a little more about Bob before I give him any money.
Anyone can claim you owe them money, but do you
really owe it? This
is why the law was passed. Just because someone claims you owe, doesn’t mean
you do. There are several items you want to request in your letter, including
but not limited to:
• A copy of the original signed credit card or loan agreement
• An itemization showing how the current balance was calculated, including charges made by______________, payments made, interest added, penalties and late fees, and any other charges added
• A copy of any amendments to the original contract, or subsequent contracts, authorizing or approving any increases in the interest rate or other charges
• The agreement between the original creditor and their collection agency or law firm which authorizes them to collect the referenced account
• Evidence that they’re licensed to collect in your state by providing their license number(s)
There are a lot of generic VOD form letters you can find online which simply state something to the effect of “I am disputing this debt, please provide proof that I owe it” blah, blah, blah. I highly recommend you avoid this kind of generic letter. It’s important that you’re specific about the proof you’re requesting. In addition, some collection agencies have become familiar with these generic form letters, which they don’t take as seriously. By taking the time to customize your letter, you’re more likely to get the results you’re looking for. That being said, I don’t recommend giving them a long list of fancy documents as proof, you should be realistic.
When sending the letter, mail it certified
or something similar,
so you have proof it was received. The post office should mail a green card
which confirms the delivery and signature from the recipient. Don’t e-mail or
fax your letter. I can’t stress that enough. All a creditor has to say is, “I
never got your e-mail” and the next thing you know, your 30 day dispute window
has passed.
Remember how I said earlier there is a sequence to a VOD Letter. Let me explain that further. Although it’s true that challenging the validity of a debt interrupts the normal collection process, I’ve had clients who thought they could stop any collection activity on an account by sending a VOD letter. This is incorrect. You can still request validation of debt at any time during the collection process, however, depending on your state, if it’s outside the initial 30 day period, legally they don’t have to respond.
Occasionally, a collection agency doesn’t have the
proof of debt you’re requesting, such as a copy of the
original contract. In most cases, they don’t have a copy in their offices. Some
agencies would rather NOT deal with this headache, and as a result, may send
your account back or sell it to someone else. In some cases, they may send you
what they have, which could consist of years of statements. This is why it’s
valuable to specify what proof you’re requesting. A copy of the original
contract being the most significant! If your account is over five years old,
good luck in getting any information at all.
This is also where the lines can cross. The FDCPA doesn’t require a collection agency to provide a copy of your original contract. In fact, it doesn’t define what constitutes as a legitimate debt validation at all. I know what you’re thinking. Then what’s the point of all of this!? Well, look at it this way; if there’s no clear definition on what constitutes as proper validation of debt then, essentially, anything could or could not be valid. Just keep that in mind for arguments sake.
What if the collector ignores your VOD
letter and continues to contact you?
I can’t stress enough that you mail the letter
certified or other such courier that requires a signature. There are some
collection agencies I’ve personally dealt with, (I won’t name names) who are
really bad at the whole VOD process. It’s because they’re lazy and don’t want
to deal with it. If you mailed your VOD letter and the agency or law firm
ignores it, or continues to contact you, then they’re breaking the law.
Any violation of the FDCPA could result in fines of up to $1000 per abuse. If you have proof of these violations, you could sue them. Before you even think about taking them to court, your next step is to send them a follow up letter. This is just as important as the initial letter. Why you ask? In some states, such as California, there’s no time limit on how long they have to provide proof of debt. Your account could just sit there, in limbo, for months or years. Of course, they can’t contact you, however, no one likes to be in limbo for that long. This is why the follow up letter is so imperative.
If they can’t properly validate your debt, your account will either be transferred to another agency or the alleged debt will be removed from your credit report. A follow up letter will be different according to each person. I’ve included a couple version of follow up letters. It can be short, or it can be a duplicate of your original dispute letter. It’s a good idea to attach a cover letter with SECOND REQUEST written in large letters. If you’ve mailed the follow up letter and they’ve ignored that as well, I highly recommend you mail them a cease and desist letter.
I mailed a VOD, however, it still shows as a
delinquency on my credit report. The FDCPA states that a collector must remove their
marking from your credit report until such time as it's been proven you owe the
debt. It’s wise to send a copy of your VOD to all three credit reporting
agencies when you mail it to the creditor. You should receive a confirmation
letter from the reporting agencies within a few weeks informing you of whether
the accounts were removed or not. With some online credit services such as www.AnnualCreditReport.com
you have the option of disputing a debt through their website. This can be
easier for those who don’t want to send a letter by mail. Keep in mind that the
website isn’t always free depending on whether you want to see your credit
score or not.
Can I send a VOD letter after I’ve been
served a summons? The short answer is yes, but it may not do
any good. Depending on your state, legally, the creditor doesn’t have to
respond. It’s too late in the game at that point. My best recommendation is to
file a response or answer with the court immediately. If you wish to dispute
the validity of the debt in your court document,
then feel free to do so.
What happens once they send me the proof I
requested? As
I stated earlier, sometimes a collection agency will send you years of
statements or some other letter from the original creditor claiming you do, in
fact, owe the debt. Choosing to accept this as proof, is up to you.
If you’re truly concerned that they’re attempting to collect a debt which
doesn’t belong to you, then you may wish to send another letter informing them
of insufficient proof. Once proof has been received, they can continue to
collect the debt as usual. This includes phone calls, letters, and the
possibility of a lawsuit.
Keep a record of any letters and phone
calls you receive during the waiting period. I suggest
keeping a record of the dates, times and contact information for anyone
contacting you about a disputed debt. This way, you have proof of any
violation.
I want to make sure you know that it’s NOT
necessary to request a long list of demands. According to the FDCPA, the
collection agency or law firm, isn’t required to provide everything on your
list. Keep that in mind.
In addition, there’s no need to threaten to sue an agency. That’s a personal choice. You may choose to include that in your letter. If my letters aren’t sufficient according to your situation, feel free to check online for more. There are tons of versions of free validation letters on various websites.
The letters are professional and can be very effective in either
ceasing communication with a bill collector, or getting the exact information
on a balance owed. I’ve seen consumers send a VOD letter where the creditor has
no information on the account at all,
and no way to prove that the debt is owed. I’ve also seen where the collection
agency has added hundreds or thousands of dollars to an account, when they have
no right to do so, or when they add the wrong interest rate and the balance
that’s owed is thousands more than it should be. If you had a$1,000 account
with a bank, then a year later they tell you that you owe $2,000, make them
prove it. That’s what this is all about.
