When Do Creditors Need to Provide Debt Collection Validation Notices?

 Posted on June 21, 2022 in Debt Collection

For creditors, the ability to collect debts from debtors is crucial. Creditors loan money to debtors with the expectation that these amounts will be repaid, and when debtors fail to make payments as required, creditors will need to take action to protect their rights and financial interests. However, creditors are required to follow certain procedures during the debt collection process, and federal and state laws address the types of actions they are allowed to take and the requirements they must meet. Under the Fair Debt Collection Practices Act (FDCPA), creditors are required to provide debt collection validation notices in certain situations. Understanding the requirements that apply in these cases can ensure that a creditor will be able to avoid any actions that may affect their ability to collect the debts owed to them.

Validation Notice Requirements for Debt Collectors

Debt collectors may include personnel working directly for creditors, collection agencies, or debt buyers. When a debt collector first contacts a debtor, they are required to provide certain information in writing. This information is known as a debt collection validation notice. This notice must include:

• A statement informing the debtor that the communication being sent to them is from a debt collector.
• The debt collector’s contact information, including their name and mailing address.
• The name of the creditor that is attempting to collect debts. More than one creditor may be included in a notice.
• The debtor’s account number, if applicable.
• Details about the debt, including the total amount owed, different charges such as interest and fees, and any applicable payments and credits. An “itemization date” must be provided showing when these charges or credits were assessed.
• Information about the debtor’s rights to dispute the debt and the procedures they will need to follow to do so.
• A “tear-off” form that a debtor may use to dispute the debt.

A debt collection validation notice may be sent through the mail or through email or other forms of electronic communication. If a notice including all of the above information is not provided at the time the debt collector initially contacts the debtor, a complete debt collection validation notice must be sent to the debtor within five days of the initial contact.

If a debtor wishes to dispute a debt, they will have 30 days to do so after they receive the debt collection validation notice. A debtor must dispute the debt in writing, and after they contact a debt collector to dispute the debt, the debt collector is required to cease their attempts to collect the debts until they provide the debtor with a verification of the debt. The debtor may also ask a debt collector to provide them with the name and address of the original creditor, and this request must be sent within 30 days of receiving the debt collection validation notice. If a debtor does not dispute a debt within 30 days after they received notice, the debt collector can proceed under the assumption that the debt is valid, and they can take whatever actions are necessary to collect the amount owed.

Contact Our Cook County Debt Collection Attorneys

If you have questions about your rights and requirements as a creditor or debt collector, Dimand Walinski Law Offices, P.C. can provide you with legal guidance, and we will help you complete the debt collection process successfully. Contact our Chicago debt collection lawyers at 312-704-0771 to learn more about our services.

Sources:

https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-collection-validation-notice-en-2109/

https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-collector-and-why-are-they-contacting-me-en-330/