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Hi there, this is Michael Bovee with Consumer Recovery Network
and welcome back to our YouTube channel.
Today, I wanna discuss something that I've actually been meaning
to for quite some time, at least, the kind of video, and
that is debt validation.
It's found in the Fair Debt Collection Practices Act and
it's an important right.
There are reasons why you need to have the ability to
request validation of a debt.
Especially today, with rampant identity theft.
What if you don't recognize a debt,
because your identity's been compromised?
Accounts opened up in your name and
suddenly now collectors are calling you and writing to you.
You had no idea and you had no involvement, there was fraud.
This how you can get to the bottom of it.
Debt validation is an important right when you don't recognize,
necessarily, who's trying to collect, right?
So banks, for example, with credit cards,
will send out your account to collection agencies.
Contingency collection agencies that just call and write to you
in an effort to get you to pay the original creditor.
Actually, if you were to pay,
you'd be paying it to the order of the original creditor.
Banks also,
and you need to be able to recognize if it's a legitimate
debt collector contacting you on behalf of your creditor.
But banks also sell debts into the open market.
They sell the legal rights to collect from you to debt buyers.
These are investors that pay perfectly good money to purchase
up the legal rights to collect on debts that haven't been paid.
And it's profitable, at least enough to keep them doing it.
And sometimes, it's hard to recognize who those people are.
Why are you collecting from me?
Why do you say I owe you and I'm paying you now?
So, debt validation helps you get to the bottom of that stuff.
However, it can become problematic for
someone who just simply wants to resolve their debt.
You know the debt's yours and you want to get over it.
You wanna get beyond whatever financial setback you had in
the past, you've recovered from.
Or at least recovered enough to try and
resolve each one of your debts, maybe one by one.
And there's this, it has been a push, especially online,
to describe debt validation as one of those legal rights that
you should always, always follow through on.
And that's actually not necessarily appropriate.
When really, all you're looking to do is say,
negotiate a debt or pay it off.
Obviously, I'm very fond of debt settlement.
Especially with debts that are already in collection,
because they're already in collection.
The damage is all ready done to your credit report.
You're not necessarily getting bonus points
because you pay off an entire amount
owed in collection that is now inflated with all the fees.
Negotiating an affordable pay off is certainly an option
most of the time.
I talk about it a lot on the site and
on our YouTube channel here.
But if that's your goal, you don't need to send off a written
request to a debt collector to validate your debt.
Because it triggers certain things on their part,
that you potentially want to avoid.
Especially when all you have to do is pick up the phone,
call your original creditor and
verify with them who they placed the account with.
In fact, often they're going to forward you over through
an automated connection to that debt collector, or
tell you who the debt buyer is.
So you can get your validation and
circumvent this whole written request, but
I wanna talk about why it can become problematic.
So lets say, for example,
that XYZ Bank has sold your debt to ABC debt collector.
Or even just placed it with a typical contingency collector
and not sold it.
They still have the legal right, they just want someone else to
try and collect from you for a time.
And you send off this debt validation request.
What does that trigger that you might want to avoid?
Well, the contingency debt collector may take
those kind of responses and
kick those accounts back to the original creditor.
Along with there's a legal question about this account,
therefore we're pushing it back to you.
What happens when that occurs, often enough, and
what you may want to avoid is that bank's legal team.
They're now going to review your file, because there's some
kind of extraordinary kind of request coming through.
What does that mean?
Well, it means that you could next be contacted by an attorney
that collects debt.
That's something that most of us want to avoid.
In other words, you've pushed from you
want to settle this account, you want to pay this account.
From a contingency debt collector,
that you may be typically able to get 30,
40 cents on the dollar type of deals from.
And pushed it over back to the creditor and
that deal now may not be achievable.
And especially if it's been pushed out to
an attorney who collects debt.
It also can happen where you're dealing with a debt buyer,
somebody who bought your
original debt that's now charged off.
And that debt buyer, who may not grab all of the media initially
that they need to show your debt, they may now have to go
and request that if they want to continue collecting from you.
And they do have to do that.
It's something that you instigate with your letter.
That, if they want to continue to collect from you,
they have to go out and get this documentation.
So that they can, what?
Prove that you owe the debt?
Certainly, but also, now that they have that documentation
it's the kind of thing that they need to sue you.
So, you've just armed the debt buyer with everything needed
to press the issue in your local court
in order to get you to pay.
When really, if your goal was just to negotiate a settlement,
you could have just gotten that done.
So those are some of the problematic ways you can use
debt validation, and again, please understand.
This video is not about whether or not you owe a debt and
you need validation of that from somebody.
When there's fraud involved, like identity theft or
you're just simply trying to evade payment,
which is a legitimate strategy.
Debt validation, I call it the debt validation boogie,
I have for years.
Doing that dance can yield to not having to pay a debt.
Having to go from one debt collector to the next debt
collector to the next debt collector.
And if that's your goal, it may or
may not be accomplished in that process.
But this whole everybody must validate,
request validation of a debt from a debt collector.
When all you really want to do is,
just get this one behind you.
That's really bad advice in a lot of cases.
A couple of other things that I wanna touch on.
Most of the debt validation requests that I've
seen over the years, and I've been doing this kind of work for
a little over 20, are overly broad.
I mean, I call them kitchen sink letters.
Basically because everything in that letter,
including the kitchen sink, is in there.
When the barrier for a debt collector to meet
their obligation to validate your debt is low enough for
them to trip over on the way to the water cooler at work.
That means that these requests where you're asking for
wet ink signatures of your original credit contract,
they probably don't exist.
Because you might have opened the account online, so
there is no wet ink signature.
And the fact that you used the card and paid a bill establishes
you knew you were obligated to the account.
So all of this stuff that goes into these letters,
all this verbose, two pages of all this stuff.
It's the kind of thing that I'm pretty sure started to get
thrown in there.
Because it's the kind of thing that you can request from a debt
collector when you're being sued, in the discovery process.
It's the kind of information that your attorney is gonna
ask them to step up with during litigation.
And again, most of us just want to avoid that.
And debt validation requests as relates to
the Fair Debt Collection Practices Act, that's kind of,
you're too late for that if you are in litigation.
You already have discovery rules in your state that apply, so
it's not something that has its place.
Having all of this stuff that you're gonna ask for,
because it's not even required of them.
And the fact is, again, reiterating,
you just want to resolve a debt.
And all of that information is not something that is consistent
with that goal.
So, when you're online and you're looking at here's a tool.
Here's something great I would use to,
you could use to send to your creditors or
debt collectors in request of debt validation.
It's not that complicated, it's actually really, really simple.
And your goal, in most cases, for
people that have a legitimate concern about whether I owe this
debt to this debt collector for this amount.
Those are the kinds of things that you're getting to
the bottom of and of course, again,
you can call your creditor, get that information.
But this helps me jump into a major topic of debt validation
and how I see it being abused by profiteers.
The debt validation boogie,
that dance that I referred to earlier.
Where, XYZ debt collector gets the account, and, years and
years ago, and even I used to use this on behalf of customers.
You could get the account kicked off to, back to the creditor,
because the debt collector got your validation request.
Creditor gets it and
says, okay, we'll just push this down the line and
another debt collector gets it.
You send that debt validation request and
then it goes back to the creditor.
Eventually the creditor sells it off to a debt buyer,
debt buyer contacts you.
You send that validation request off and
you look like somebody who is just not low hanging fruit.
They wanna collect from people that have the ability and
willingness to pay.
Those two ingredients are what collectors are limited to.
That's what they want to focus their time on.
And you sending debt validation request letters means
you're neither willing or able, one of the two, or both, to pay.
So they're gonna spend their time on other accounts.
It's not like that anymore, years ago it was.
But that debt validation boogie used to be effective, and
in some instances it still can be today.
But what profiteers do, and what I consider in a lot of cases to
be scammers, they build this entire program of letter writing
and requests out on paper,and then they sell it.
Or they have affiliate marketers sell it
as some debt invalidation.
In other words, they're taking a known right that's already
covered and talked about quite a bit online.
And stretching it out to mean something other or to effectuate
something other than what it was originally designed to do.
And they charge thousands of dollars.
I just recently have heard of a few cases.
One where the guy had almost about $100,000 worth of debt.
He had already paid about $8,000 in fees to this company,
to invalidate his debt using these debt validation requests.
Or at least the premise, the initial premise of those
letters that were sent, were to invalidate the debt.
And you can't do that, right?
It's just an extrapolation of an important consumer right and
taking it to and stretching it out to mean something other than
what it really is intended to mean.
And then, banking on the fact,
that some very predictable things are gonna happen.
Your credit card bank isn't getting paid,
they're gonna charge off the debt after six to seven months,
six months, usually.
And it's gonna get dropped into the collection pipeline.
Consisting of three pipes, contingency debt collectors,
debt buyers and attorneys that collect debt.
That's what your bank's gonna do.
And each one of those instances, as they happen, they might have
some special sauce letter with obviously verbose and
out of context, that they might send.
All in the hopes that really all you're doing is the debt
validation boogie.
And they're having this secret way of handling this with all of
these legal questions.
Ultimately what can happen is that you just get sued,
you wasted thousands and thousands of dollars in upfront
fees that you're probably not gonna get back.
When in essence, all you wanted to do was resolve your debt that
you could longer afford.
But you wanted to do something, you wanted to be responsible and
take care of whatever part you could, at least, afford.
And that type of process, and again, I consider it a full
scam, is not helpful, it's counterproductive.
You end up owing more,
you end up getting sued where you could have avoided it,
because of these letters that go out.
I want to close with this and
it's repetitious because it's important.
If your goal is to resolve a debt
with a debt collector of any flavor, requesting validation is
often counterproductive, but it has its place.
We have a ongoing discussion about debt validation on a very
dedicated page of the Consumer Recovery website.
We have the comments below,
we can engage in discussion about that.
It's not a place to talk about whether or
not banks lend real money or fake money.
It's not a place to talk about whether debt collectors
have to meet a certain obligation for validation.
It's a place to talk about whether or not to strategically
use debt validation as a way to help you resolve a debt.
It's a great stall tactic in some instances,
backfires in others.
There's a real good way to go about using this process when
all you need to do is figure out whether you need to owe
a creditor, a debt collector, a debt buyer.
And you can avoid having to send these letters.
Michael Bovee, Consumer Recovery Network.
See you on the next video.
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