[MUSIC] 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. [MUSIC]