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What's the Purpose of Debt Validation Letters?

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I have a few questions about debt validation letters.

For background, our family lost everything we had and now have zero income (other than what a local church gives us for utilities, gas, and postage for debt validation letters). We have exhausted all pro bono legal help alternatives (somehow, zero-income doesn't qualify...hmm). We're currently dealing with 8 OCs and 2 CAs on multiple debts...credit cards, car notes, mortgage, and other things.

None of our bills (aside from utilities paid by the church) have been paid in the last 6 months (because we don't have any money and the economy is prohibiting me from quickly returning to the workplace). Also, at this point in our hardship, litigation-avoidance is my number-one priority, in hopes that I can free up some time to become re-employed. As an FYI, I was a Senior Vice President at a financial services company (computer/IT division) prior to getting laid-off (in favorable standing) due to a merger.

The number of CAs we dealt with a few weeks ago was much higher; however, I sent them letters (note: I've been to law school -- but didn't finish -- and am very hardcore in my legal and business dealings). Out of the 6 letters I sent, I had 6 cases dropped and have received confirmation from the CRAs. I've also, as part of the agreement, required them to sign covenants to the effect that will provide me with 1099s so as to preclude them from subsequently selling off my debts to others.

Ok, enough on the background. Here are my questions:

1) All too many times, I read something to the effect of "I sent a validation letter and then got sued, and I lost," or "I sent validation letters and got no response." How much LEGAL weight does a validation letter REALLY carry? As for my own case, it wasn't the DV letters that won my cases -- it was all in the way I worded them.

2) Over and over, judges rule in favor of the CAs, regardless of how many DV letters were sent and not answered. Again, I ask, what's the point?

3) Also, I mentioned DV letters to an attorney-friend of mine, and he laughed so hard that he almost choked on his salad. As HE put it, OCs and CAs only have to validate the debt to the COURT'S satisfaction, and not to MY satisfaction, and that as long as they know they can validate it to the judge's satisfaction, they're not going to waste their time & money on DV letters (which he callls a 'pi$$ing contest with a skunk'). This makes perfect sense, and much of the case history I've reviewed supports this. What's the point of a DV letter?

4) Also, even if a collector failed to cease collection activity and incurred a $1,000 fine for each violation, that would be a separate issue from whether I owe money. In other words, obtaining a $1,000 judgement against a CA does not exonerate me from debt liability or extend the amount of time I have to repay the debt. So what's the [real] benefit of a DV letter?

This post is not intended to question, or otherwise "challenge," the excellent knowledge shared collectively among those who post on this board. Sending DV letters is very expensive (for me), and I simply want to exercise due dilligence by determining whether the benefits of a DV letter outweigh the costs.

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I simply want to exercise due diligence by determining whether the benefits of a DV letter outweigh the costs.

Yes they outweigh the costs.

Lets say...you had a 10K debt with the worse sleaze CA company in the USA, they shot your rights per the FCRA right out the window, called neighbors, fellow church members and threatened and harassed you and everyone around you over this debt. Lets say you paid this debt out of fear of being sued and sent to jail (like they told you), plus the 5K interest and charges they added on because it took you 2 years to pay it off. In the meantime you have been humiliated and be-littled by this agency.

Now lets say at receipt of the first communication from the CA you sent off a D/V letter, they were unable to verify the debt and ceased collection when you threatened them with a lawsuit along with the 5 violations of the FCRA.

What do you think is a better scenario?

A dispute/validation letter is used to prove ownership for those that have been tagged with an account that isn't theirs, is being reported wrong, a victim or identity theft, ect. ect.

Its purpose is to either resolve the issue and to have proper paper trail to take with you to court should you end up there. The statement that your atty friend said is borderline BS. The validation that the CA must make to the court is detailed enough that it should suffice your needs as well. They are required to report TRUE and ACCURATE information, if you have proof that the information they have provided for "validation" is inaccurate (IE Signatures don't match, SSN doesn't match, you've been a victim of identity theft, etc.) then you have grounds (afforded to you by the FCRA) to have their collections ceased and the entry removed.

1K fines are incurred when they do not follow the FCRA as outlined and passed by our Gov't. I've seen friends who have went to court and received judgments in their favor also have their debts dropped, usually due to violations of the FCRA.

Some judges aren't up to quoting the FCRA. It happens that rulings and judgments are made that are outside the FCRA guidelines, that’s what appeals courts are for.

Hope that sheds a little light for you.

[Edit by kimber6337 on Saturday, December 21, 2002 @ 07:48 PM]

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Hi, Kimber

Thanks for the information. I apologize for mis-wording my original post/questions re DV letters. Let me try and clarify...

If you send a DV letter to a CA, they must cease all collection activity on the account(s) in question until such time as they provide you with validation; otherwise, each ex post-facto instance of collection activity constitutes a separate violation and subjects the CA to liability up to and including $1,000. That's the easy part.

However, are they actually REQUIRED to provide you with validation, just because you have the legal right to "ask" for it? Couldn't they simply elect to a) ignore your DV letter, B) cease collection activity as a result of your sending the letter, and c) send proper validation directly to the court and file a lawsuit against you?? While a lawsuit, in and of itself, falls into the category of "collection activity," I'm not convinced that a DV letter actually prevents them from filing it.

Here is a realistic example. One of my debts is $17,250, due and immediately payable. Now, let's suppose I send a DV letter and they sue me anyway. As a result of their continued collection activity after receiving my DV letter, I file a countersuit in the amount of $,1000 + court costs.

If the CA has an airtight case against me AND I have an airtight case against them, wouldn't the judge rule that the original plaintiff (the CA) is entitled to the $17,250 + attorney's fees, court costs, etc. against me, and that I, the defendant, am entitled to $1,000 plus court costs on my countersuit??

My DV Strategy

My current strategy is to automatically send a DV any time I am initially contacted by a CA. It requires that they send me all charges, payments, fees, and calculation methods, as well as certified copies of any contract(s) I signed that obligate(s) me to pay, certified copies of any contract(s) I signed authorizing automatic payments for "insurance" (unless same was included in the original contract), and certified copies of any incidental agreements I signed (such as for status or interest rate changes).

I also instruct them that they are not to contact me in any manner whatsoever, except to a) provide me with the information I requested, or B) to advise me that the debt has been fully released due to the lack of ability to validate, or c) to advise me that they have filed (notice past-tense) a lawsuit.

I further state that I will not correspond back with them or any party(ies) acting on their behalf until I receive validation of the debt AND provide them with a written statement to the effect that I accept and agree with their validation. I go on to demand that they immediately report my account as being "disputed" to the big three CRAs and provide me with written proof that they have done so.

I also require proof of licensure (including license number) in my state (Tennessee), if and when applicable.

To underscore all of this for them, I furnish a few statutory references and cite a few cases (in correct bluebook style). I close the letter by saying that if I hear anything whatsoever from them outside the scope of what I listed above, I will report them to their local BBB, the FTC, and their state's AG's office, and will file an ex parte motion for summary judgement against them in the General Sessions Court of Davidson County, Tennessee (IF they have done something that constitutes collection activity after receiving my DV letter but prior to furnishing me with acceptable validation).

I close out with the phrase, "I thank you in advance for taking the initiative to protect my best interests as a consumer and your own as a professional and reputable collection agency. If you have any questions, comments, or concerns regarding anything I have outlined in this correspondence, I will be glad to address them once you have honored, to my satisfaction, the requests contained herein. I trust that you will handle this matter expeditiously."

And, since the law doesn't prohibit me from sending additional DV letters or status inquiries, I usually send the CAs a "follow-up" letter every 2-3 days (USMRRR), stating that I know they have received my initial letter and reiterating my expectation that they handle the matter as expeditiously as possible.

Thus far, my win/loss record using this strategy is 6-0. I'll post copies of some of my letters when I have the time.

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please post copies of your letters a soon as you possibly can. I am not so great in the letter writing area and would like to be taken seriously the first time I ask for DV.

I do not intend to cut and paste them, I just try to get samples of all types of letters that I can then edit and adapt to my own situation.

If you would like to email me a sample, I'd be grateful. Thanks

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I'll be glad to post them, and of course the standard disclaimers (lol), at some point when I have the time.

Part of that "6-0 record thus far" is just luck, I believe. But I'm sure the wording of my letters have something to do with it as well. I sent another batch of first-time DV letters Saturday, so we'll just have to wait and see how those turn out.

Another couple of things I'll point out is that I don't do "intent to sue" letters (and haven't had the need to, as of yet). The reason is because in my initial DV letter, I state that I *will* sue should I hear anything else from them before providing me with validation. So, I've ALREADY notified them of my intent to sue.

Also, another tactic I use is when writing "follow-up" letters, I put "mylastname vs. agencyname" (substituting the appropriate names) at the top, in the "In re:" part. Not only is it an attention-getter, but it's a further assertion of my right to sue should they violate.

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I'm looking forward to those letters, sounds like they're just the kind of thing I could use :) I'd also like to see the letter or verbage you use regarding the 1099-C, that one's important too !

I'm sending one out later this week to a CA who, so far, has refused to answer my validation request yet who continues to harrass me with phone calls.. violation !!

Per some of your other questions about a CA/OC suing and the relationship to DV letters, have you read the Cass Opinion letter ? That clears up a lot of those questions.

Awaiting your postings :upsidown:

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<blockquote>Originally posted by LadynRed

I'd also like to see the letter or verbage you use regarding the 1099-C, that one's important too !

Yes, very important. If a state allows CAs to sell uncollected portions of accounts (such as those that have been settled for less than the amount that has been asks), then a negotiated settlement with CA #1 is worthless...because they can turn around and sell the foregone amount to another CA -- thus, you end up with the same debt amount you were originally dealing with, only a different CA.

The 1099-C creates a "forgiven debt," which, by implication and lots of case-law, means that the CA has surrendered his/her right to sell or assert any legal claims to the portion remaining after settlement. The 1099-c also, however, converts the foregone debt into taxable income for the debtor, provided the amount is above the $600 floor. But bottom line, I would rather pay Uncle Sam a little tax on the amount than pay a CA the entire amount!

CAVEAT: *IF* no debt validation exists (anywhere) for the amount ABOVE what you settled for, the IRS will disallow the CA's claim for a write-off tax deduction AND the supporting 1099-C. And as such, the amount would not be considered taxable income to you. Bottom line: An account write-off deduction must be supported with documentation acceptable to the IRS. If the write-off happens to be disallowed, then incidentally, the CA may still sell that portion of the debt to another CA. But since no validation exists, the other CA would just be spinning its wheels and, hopefully, putting $1,000 in your pocketbook from time to time!

And one last thought... Have you ever had an account (or portion thereof) "written off" (by ANYONE), but for which there was incomplete or no validation? If yes, then send your proof to the IRS and request that they * A-U-D-I-T * the person or company, so as to ensure that the amount written off was INDEED a valid debt. Also, make a copy of your letter to the IRS and all supporting documents, and send it to the person/company who "wrote off" your unvalidated account. Try and time it so it will arrive at about 4:30 PM on a Friday afternoon, just prior to a holiday weekend. When they read it, the person or CA manager will either reach for their heart medicine or puke up their lunch and breakfast (at a minimum).

And yes, it's legal as long as you have reasonable, solid evidence, and aren't taking the action out of malice.

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<blockquote>Originally posted by LadynRed

:D ROFL !!

The vision of a scummy CA guy losing his cookies over that IRS letter is pretty funny ! I love it.. I'll have to keep that suggestion tucked away.

Thanks !


Nothing takes the wind out of a person like finding out they are being reported to the IRS for something, and that an audit might result from it. :)

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So my question for you - regarding the scenario of you being sued for the $17,000 and being owed $1000 for violations - is this: What about the doctrine of "unclean hands"? Couldn't this be an applicable defense to their claim for the $17,000?

An explanation of the doctrine:

There is a doctrine in law called the "unclean hands" doctrine in which a plaintiff is denied any recovery because it comes into court with unclean hands (i.e., being guilty of some illegal or related misconduct), and the doctrine says (when the doctrine applies at all) that the court will leave the wrongdoers where they are and deny relief to them all in such a situation.

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<blockquote>Originally posted by cookiemnster

So my question for you - regarding the scenario of you being sued for the $17,000 and being owed $1000 for violations - is this: What about the doctrine of "unclean hands"? Couldn't this be an applicable defense to their claim for the $17,000?</blockquote>

Never heard of the "clean hands doctrine," but if it exists, I would not be able to use it as a defense to their $17,000 claim. Reason being, they are two entirely different cases -- one (their claim) is a case of failure to pay a debt, and the other is a case of a company violating the FDCPA (my claim).

The applicable law here is that an FDCPA claim "has nothing to do with whether the underlying debt is valid. An FDCPA claim concerns the method of collecting the debt. It does not arise out of the transaction creating the debt." Azar v. Hayter, 874 F. Supp. 1314, 1318 (N.D. Fla. 1995). Affirmed: 66 F.3d 342 (11th Cir. 1995). It went on to the USSC, but certiorari was denied. The issue in "Azar" was essentially the same doctrine that you mentioned, only that the "wrongdoing" was being alleged against the debtor; i.e., the relevance of the debt itself in an FDCPA proceeding.

If both issues (defaulted loan AND the FDCPA violation) were considered to be one-in-the-same, I suppose other legal things would come into play.

The closest thing I've heard of re "clean hands" is the doctrine of contributory negligence, which, if I'm not mistaken, bars a plaintiff's claim if he/she is the least bit at fault. There's also comparative negligence, where damages are prorated based on each party's percentage of negligence. But I doubt either of those doctrines would apply to FDCPA cases because they are compliance enforcement issues and not negligence torts. I'm probably all wrong, but that's the way I understand it.

[Edit by buzz-saw on Wednesday, December 25, 2002 @ 05:46 PM]

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Right, I see what you're saying ....

If you do a search on "doctrine of unclean hands" on google.com, you'll see lots of applications and definitions of the doctrine, but I couldn't find any specific to a collection agency (I did see some where it was used against a creditor, just not a CA). My guess is because a majority of the time, these are played out in small claims court.

I think you could use it as a defense if they sued you for the $17,000. The applicable law that you cited, from what I can tell (and I'm not a lawyer) prohibits them from countersuing you for the debt in a FDCPA/FCRA violation suit or you countersuing them for FDCPA/FCRA violations, it doesn't prohibit you from using the doctrine as an affirmative defense.

Maybe tomorrow calawyer will jump in here and give his two cents, I'd be interested in his opinion.

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I'm thinking it couldn't be used as a defense because each action/circumstance is different; i.e., one is a compliance issue and the other is a debt issue.

I'm glad I found that case, though. It does answer the original question I posed...whether I could have a judgement entered against me about the debt and have part of it canceled due to my counterclaim.

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Your lawyer friend is probably correct with respect to his opinion of DV letters. It really is to the court's satisfaction in the end. In reality, if you cannot pay, your pursuers are wasting their time and money because even if they prevail they can never collect until you can pay. Most often creditors like Discover Card will sue irrespective of the amount owed with the intent of obtaining a judgment which allows them to go after people at any point in the future when they can pay. Judgments in most states never expire or can be renewed. In your particular situation, are you considering filing BK when you can afford to do so? As funny as it sounds, many people cannot even afford BK because lawyers cost money, there are modest filing fees, they could lose assets in a Chapter 7 and/or they cannot qualify for a Chapter 13 because they are not earning wages! If I were in your shoes, I would go out and get a job, any job, then work for a couple of months, and then file Chapter 13. You would probaby meet the criteria asset-wise unless you own an expensive home or if you filed previously or if there are other reasons that would preclude you from getting out from under a mountain of debt. So again, my strategy would be to scrap all of the validation crap and instead direct energy and resources to regaining financial stability and should BK fit into the schema of things, so be it.

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Yes, regaining financial stability is the name of the game -- and my only goal. As for "go out and get a job," I must assume you are currently employed, otherwise you wouldn't make it sound as easy as going into my yard and pulling a blade of grass.

I hold three degrees, over 20 years work experience, have zero bad work-references, and am in good health. I've been seeking employment (constant, and through all avenues) for many months now -- anything from ditch-digging to senior vice president at a large company (which, incidentally, was the last job I held). McDonald's says they can't hire me because I don't have food-service experience, the community college where I used to teach won't hire me because I don't have one of the newer state certificates, and Roadway won't hire me because I don't have a commercial driver's license and prior OTR experience. Those are the only responses I have received.

Look at the economy. Records (and not good ones, either) have been set over the past twelve months. Also, according to a CNN financial newsbrief I watched back in November (may or may not be valid information), more Americans are currently out of work (as a percentage of total workforce) than in the past sixty years!

All I can say is that I'm going to keep on pushing hard and re-enter the workforce at the first sight of employment. As for those lucky enough to have jobs during these times, they'd better thank God and keep their fingers crossed about their own jobs.

The "validation crap" is a part of my financial reconstruction in that it shows a court, should that situation arise, that I have made reasonable efforts to work out an arrangement with the creditor (willingness to own up to obligations). Of course that will not relieve me of any debt, but it sure won't hurt me when satisfying a judgement(s). People are usually more flexible with "willing" debtors than unwilling ones.

Back to the job thing. You say I need to get a job. I already know that more than anyone! Pouring salt on the wound only serves to antagonize. In fact, let's see who is really more serious -- you, or me.

You leave a message that says, basically, "hey, just go get a job!" And, I say, if it's that easy and cut-and-dried, then I DARE YOU to GIVE ME a JOB.

I will be awaiting your e-mail with specifics on the job. I have no minimum salary requirement(s), but somewhere within market would be nice. I have no benefits requirement(s), but medical/dental/vision and 401 benefits would be nice (at some future point).

NOW... If you DON'T give me that job (that is allegedly so easy to get), then your telling me to "get a job" but seeming reluctance to do anything about it means you are a part of the problem, and not a part of the solution.

So, put your money where your keyboard is, or shut it off. I am awaiting your job-offer.

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buzz-saw, I can tell you for sure that the job situation is bleak for even highly skilled people. Actually, highly skilled people are having an especially tough time finding a job, as those are the ones that pay the best. If you want a minimum wage job, they are still relatively easy to find, and they don't really pay the rent.

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I respectfully disagree about minimum wage jobs being easy to find. They are not for people holding university degrees. That's been my experience.

They tell you are overqualified for the position and you tell them you don't care, you just want to work, and they say sorry, no dice, and hire some kid barely making it thru high school instead.

You all will laugh, but lately I have been going to local companies that have collection departments and asking for work, as I figure that is where I have had the most recent relevant "experience." :D

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Its not funny at all. For someone with a 20 year work history and degrees, getting a minimum wage job is, laughably, next to impossible ! Its so stupid sounding on the surface, but the people offering those types of jobs don't want to have to go thru the expense of hiring yet another person (despite the obvious min wage turn-over rate) when the experience, degreed person finally gets a REAL job that pays a decent living wage.

I'm in the IT industry, 20+ years in IT support, training, network adminsitration plus 6-7 years of web design/development/administration experience. When I was laid off last Feb, I applied for several jobs that were far beneath what I wanted and was qualified for, but I was turned down for ALL of those because I was already OVER QUALIFIED ! So, I was, like buzz-saw, using every means I could to find a job, and I was lucky enough to finally get one in Sept that pays a decent living wage. This 'get a job' mentality is not that cut and dried, it 'ain't that simple any more !

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Except you'll have to leave your morals and decency at the door of any collection agency you go to. They have none. I'd suggest you keep some kind of ulcer remedy at hand because those people work themselves into agitated states so they can scream at and bully people with invectives, threats, and other nastiness. You'll also need a sleep-aid, I don't know how those people sleep at night w/o one.. they are the most miserable group of people I've ever encountered, they have to be in order to inflict misery on so many others on a daily basis !

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<blockquote>Originally posted by LadynRed

Its not funny at all. For someone with a 20 year work history and degrees, getting a minimum wage job is, laughably, next to impossible ! </blockquote>

That's very true. I haven't been called "over-qualified" yet, but I'm sure that's the sentiment among many of the lower-paying companies I have applied with. I also personally know many people, with more qualifications than I have, who are in the same boat -- and number is constantly on the increase.

It is not because people "quit" their jobs and are too lazy to go out and find new ones; it is the poor economy -- supply and demand -- many people have very little money these days, but those who DO have money raise their prices and expect the former to "pay," which, of course, they can't. Most of it goes back to politics, but I won't comment further about that. Oh, and I have that (held elected office) in my background, too -- but I don't dare list it on my resume! :D

If you are here in Nashville and have an IT background, I probably know (or know of) you. My last job was Senior Vice President / IT Director at a large company based here. Over the years, I've either worked with or interviewed just about everyone on the Nashville IT scene.

The IT "job market," if that's what you want to call it, is absurd. I mean, essentially, NOBODY is hiring -- this last Sunday's classifieds had only three (3) IT-related jobs advertised, and I'm not sure whether they were really jobs or just ads for agencies. I am beginning to form the opinion that all companies nationwide have ditched their computer systems altogether. I mean, if most everyone was laid-off, and they aren't hiring anyone new, that would indicate either auto-pilot computers (no such thing) or that they've ditched them.

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Well, its possible that we may have crossed paths, but I've only been here in TN since March of 2000, prior to that I was in S.C. for 11 years. I did send out a lot of resumes, mine may have crossed your desk at some point when I was looking to relocate to TN :)

I now have a job doing web design for a very large healthcare company - you can probably deduce which one ;) - and I love it. I don't miss having to do tech support one bit, but my IT background certainly comes in handy when dealing with the computer-kids that are in IT these days.

In Feb 2002, when I was looking for work and went to one of the larger headhunters in town, I was told by their IT recruiter that there were 80K/yr IT guys willing to take 25K jobs so he figured that I wouldn't get anywhere near what I was hoping for and would have to 'settle' for a 20K/yr job, whcih is all the guy would offer me. Well.. a 40% cut in pay in 1994 wreaked havoc on me for 6-7 years afterwards, so there was no way I was going to 'settle' for THAT again !!

E-mail me.. I know of a possible opening (or 2) that could come up in the next month or two. Not with the company I'm with now, but another one.

[Edit by LadynRed on Thursday, January 2, 2003 @ 01:25 PM]

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