What is Debt Validation?


When used correctly, credit is a useful tool. When it comes to bad credit, however, your past could creep up when you least expect it. Collection agencies have the power to reactivate long-forgotten accounts and hurt your credit score in the process. Harassing phone calls, the threat of legal action, and wage garnishment are just a few of the all-too-common collection tactics. While going head-to-head with the collection agency may be daunting, don’t sign a check just yet. Remember to read, How to negotiate with your creditors and fix you credit score.

With the help of collection agencies, outdated debts have the power to haunt your credit score. However, your state’s statute of limitations (SOL) on overdue accounts could prevent collectors from coming after your money.  In some states like Minnesota have a six year Statute of Limitations on collecting consumer debt. Protected by individual state laws, your SOL time period usually begins on the first day of your last payment, and can last for several years (refer to the National Association of Attorneys General or a licensed attorney for information about laws in your state or search it on Google). If the time on your SOL has run out, collection agencies can’t collect the debt if challenged legally, however some state laws still allow the alleged debt holder to request collection. To assert your rights regarding unverifiable debt, it’s important to begin the process of debt validation, which is protected under the Fair Debt Collections Practices Act. Similar to a credit dispute, debt validation is written in letter format and challenges false information. It asks the collection agency to prove their claims, or else lose the debt. Debt validation requires the collector to provide proof that the debt was ever owed, that they now own the debt, and that you in particular are obligated.

To begin debt validation, follow the steps below:

  1. Obtain a copy of your credit report and highlight the negative items being challenged. Write and address the validation letter to the collection agency, including your account information and the SOL laws in your state. Finally, ask them to validate your debt or remove it from your credit report.
  2. Mail your letter and request a return receipt. The collection agency has 30 days to respond. If they cannot verify your debt by providing statements from your original creditor, proof that they own the debt, a copy of a signed agreement, and documentation that the SOL has passed where applicable, then you should not have to pay.
  3. If your debt is not validated, send the collection agency a copy of your return receipt, validation letter, and an actual dispute letter, referring to the FDCPA as the basis for the dispute. Ask them to remove the negative items from your credit report.
  4. Wait 30 days for the collection agency to respond. Regardless of their communication, check your credit report periodically to make sure the debt has been removed.

Debt validation is a powerful tool against collection agency aggression. If your rights have been violated, exercise your ability to fight back. The FDCPA was enacted to help you.

What if I have already damaged my credit.  How do I fix my credit?

Remember, if you get into trouble with your credit, you can Negotiate with your Creditors.  It just takes some time and patience and you can be on your way to having great credit again.

Sample Credit Dispute Letters


Sample Credit Dispute Letter sent to Credit Bureaus

Sample Credit Dispute Letter to send to Collectors and Individual Companies

Sample Debt Validation Letter

Sample Paid Account Dispute Letter

Examples of Dispute Letters

Make Sure Your Disputes Are Legitimate

Be sure you don’t do anything to make the credit bureaus think your credit report disputes are frivolous. Don’t dispute everything on your credit report and absolutely do not send all your disputes at once. If you dispute the same item more than once, you should give a different reason for each dispute, so the credit bureau doesn’t think you’re sending duplicates. The credit bureau has the right to deem your disputes frivolous and if that happens, the bureau also has the right to reject your dispute.

Statute of Limitations by State

Remember, the statute of limitation starts from the last time you paid on your bill.  If you have not paid for five years and 364 days on an old debt, and you make even a one dollar payment, the six years starts over.  If a collection company has your debt, the last active date should be the last time you paid the original creditor if you have not paid the collection agency.  Many times they have the active date as the date they received the account.  This is against the law and it is a reason to have a debt removed or the date fixed.


State Statutes of Limitations

Choose a state from the list below for state-specific statute of limitations laws, identifying the time limits for filing different types of civil and criminal cases in your state.