If a debt collector asks that you pay a debt placed with him, you have the right to dispute the debt. You will achieve two noteworthy things by challenging that debt. First, if you challenge the debt in the first 30 days after the debt collector gets hold of you, you can stop the debt collector from carrying on collection activities until he verifies that you really owe the debt. Second, you can require the debt collector to reveal to any credit agency to which he reports that you dispute the debt. This is valuable because many credit grading models ignore disputed debts.
Dealing with Debt Collectors within the First 30 Days
The most best time to challenge a debt is during the first 30 days after you receive the initial letter from the debt collector. This period is referred to as the verification period. During this time, you don't need a valid reason to dispute the debt. It's permissible for you to only ask the debt collector to verify that you really owe the debt. This is a powerful request because it essentially places the burden of proof on the collector. Unless the debt collector produces confirmation of the debt, he can take no more action to collect from you.
Of course, if you have a valid challenge to the debt, make sure to assert it in your verification request. Simply requesting validation doesn't require that the debt collector describe the debt as disputed to a credit reporting bureau. To invoke the requirement that the debt collector describe the debt as challenged, you must put forward a specific valid dispute to the debt.
Responding to Debt Collectors after the First 30 Days
Even if you miss the first 30 day period of time, it's still a good idea to challenge a debt. A genuine dispute outside the 30 day period will still force the debt collector to describe your debt as disputed. Don't produce a trivial dispute, because you will sabotage any future lawsuit you may file.
If you live in Texas, you have more rights that aren't available under the federal Fair Debt Collection Practices Act. You may dispute a debt at any time by presenting the debt collector a letter of your dispute. Upon receipt of the notice, the debt collector must cease all collection efforts until he investigates and validates the true amount of money of the debt, if any.
No later than 30 days after the debt collector receives your challenge, he has to answer in writing either denying the dispute, admitting the dispute, or requesting additional time for the investigation. If he acknowledges the dispute, he must correct his records and give a notice of the inaccuracy along with a copy of the corrected data to each agency to whom he presented a report of the wrong information. If he asks for additional time, he must correct his books in conformity with your request and present notice of the correction to each agency to whom he reported the disputed data. The debt collector may restart collection attempts only after his probe is finished and he has concluded his records are correct.
Disputing Debts with Creditors
Federal debt collection law doesn't apply to creditors. You don't have comparable rights when you challenge debts with your original creditors. You do, however, have challenge rights by virtue of other federal and state laws with particular kinds of creditors.
For all creditors, Texas law prohibits representing that a an individual is willfully refusing to pay a debt if the person has disputed the debt in writing. Texas law, however, doesn't specifically make reference to credit reporting as the federal law does. As a practical matter, however, a creditor who reports to a credit reporting agency that you have refused to settle a debt after you have challenged that debt is almost always going to be in violation of this law. Texas law is also broader than the federal law. It proscribes making this representation to anyone, not just a credit reporting agency. Consequently, a creditor who sells a debt to a third party debt collector while improperly representing that you are refusing to pay may be in violation of this law.
Unfortunately, there are unresolved legal questions regarding the interaction of the federal Fair Credit Reporting Act and the Texas Debt Collection Act that make it hard to hold a creditor liable for violating this law in its report to credit reporting agencies. But it's still wothwhile to send the challenge letter because the creditor may comply to avoid the possibility that federal law will be understood to grant the enforcement of this state law requirement. The dispute letter may, therefore, preclude the creditor from misrepresenting your debt to third parties other than credit reporting bureaus.
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