FDCPA Validation of debts and Sample Validation Request Form

Validation of debts and Sample Validation Request Form

The FDCPA provides that debts that are pursued by a debt collector be validated. Validation of the debt is every debtor's right. You don't need a reason. The fact that you request validation is quite enough to evoke to protection of the FDCPA. The Act provides that (paraphrasing, within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall (unless already provided in the initial contact), send the consumer a written notice containing -

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; and

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt is disputed, the debt collector will obtain verification of the debt.

This means that if you write a debt validation request, a sample of which is available upon request, all communications and enforcement must stop until the debt is validated. Yes, that means lawsuits also.

What happens if the collector refuses to validate the debt?

You should only be so lucky. If after a validation request under the FDCPA, the creditor refuses to cooperate, then the creditor may not legally collect the debt. If the collector does, then the law is violated and a suit for damages may be brought.

Such a suit was brought in federal court in New Jersey against MRS Associates, debt collectors for a company going by the name of Lake Cook Partners. Lake Cook engages in, what is known in the business as, "bottom feeding." Bottom feeding is a term used to mean the acquisition of "dead" or written off debts. Lake Cook purchases the debts from credit card companies (and perhaps other companies) for pennies on the dollar. Lake Cook then uses MRS Associates to make a debtor's life a living hell.

What if the debt collector ignores the request and collects the debt anyway?

That happened with MRS Associates. MRS was requested to validate a debt alleged owed by a husband of a client who received a bankruptcy discharge. The husband claimed that his wife had applied for the card, not him. Not that it would matter anyway; the husband was entitled to validation under the law. If validation was not forthcoming, too bad for the collector. MRS believed that the burden was on the debtor since the card had been open for "21 years."

Note: MRS stated that the debtor had the account for 21 years, the fact that it "is highly improbable" that MRS would have been able to get a copy of a document that the debtor signed 20 years ago did not excuse MRS from obtaining what validation that they could get. In this case, MRS did not even attempt to get anything. Perhaps MRS did not want to be bothered to comply with federal law. I guess it's easier that way.

Outcome: The foregoing message was in large part the reason that MRS settled with the debtor for $4,500. Needless to say, the debt was never validated. The debtor would have been forced to pay over $10, 000. You can see a copy of the complaint here.

Lake Cook (continued)

Not even two weeks after the $4,500 payment, the same client was contacted by Creditor's Interchange, Inc., ("CI") a debt collection outfit in Buffalo, NY. The collector calls this office and this is what transpires: A collection agent by the name of Richard Kerns who says he works for CI calls.

We answer the phone saying "law offices" as is called for by our business procedure.

Kerns asked for the debtor (name withheld for privacy).

I identified myself as "Mr. (debtor's) attorney.

Kerns says, "I did not know he had an attorney."

Kerns is assured by me that I represent the debtor for all purposes.

Kerns asks if I am an attorney.

I tell him that I am and ask for debt validation.

Kerns then demands payment from the client.

l say, "we are requesting validation of that debt."

Kerns states, "Validation? What validation? He owes a debt!"

Kerns then states, "Listen smart guy. You know what? I'm going to call your client!"

He does.

I learn that Kerns is collecting the same debt that MRS was trying to collect. As a matter of fact, the same creditor, Lake Cook, is now collecting under a different corporate name, Hilco Receivables.

Outcome: CI & Hilco settle the next case for $5,000 for one phone call. That is $9,500 in settlements paid to the same client on the same debt.

Damages Under the FDCPA

The FDCPA provides for a private right of action against violators. This means that you can get a lawyer and sue for damages. A partial list of damages that are awardable are:

Statutory damages up to $1,000 for each case. This means that the violator can be charged even though there are no other damages (see below).

Attorney's fees. You can make the violator pay for your lawyer. This is big advantage; lawyers are expensive!

Actual damages including:

• Stress related injuries:

• Heart attack, angina, chest constrictions;

• Miscarriage;

• Ulcers, diabetic flare-up;

• Shock;

• Loss of appetite;

• Crying;

• Nightmares; insomnia, night sweats;

• Emotional paralysis;

• Inability to think or function at work;

• Headaches;

• Shortness of breath;

• Anxiety, nervousness; fear and worry;

• Hypertension (elevation of blood pressure);

• Stress to children;

• Irritability;

• Hysteria;

• Embarrassment, humiliation;

• Indignation and pain and suffering.

• 
  

And this is just a partial list!

Monetary damages:

Payment of a debt barred by the statute of limitations;

Taking one's property unlawfully or intimidating a debtor to return property by violating the FDCPA, e.g. "If you do not return your DVD player to the store, we will bring criminal charges!"

Long distance telephone charges for phone calls to a collector who states that you must call him back.

Attorney's fees to defend a prior suit brought in violation of the FDCPA;

Damages for intentional infliction of emotional distress generally (see above).

Your attorney may use medical (psychiatric/psychological) testimony, but does not need to. Damages for emotional distress can be claimed even without medical support. This does not mean they will always be believed, of course. It is up to the judge or jury to decide if the plaintiff is telling the truth. Anyway, the plaintiff in the FDCPA lawsuit starts with a tremendous advantage.