Disputing a Debt

March 28th, 2008

Disputing a debt is something that most people will have to do at one point in time. When a debt is invalid or a collection agency has violated some laws such as the Fair Debt Reporting Practices Act, a letter disputing a debt may be necessary. Knowing how to dispute a debt is very useful especially when there are so many creditors and debt Collection Agencies abusing their powers when attempting to collect debt from consumers.

How do I dispute debt?

When a collection agency sends you a letter of collection and you doubt the validity of the debt or of the collection agency, you have the right to dispute the debt under the Fair Debt Collection Practices Act.

You must notify the debt collection agency in writing within 30 days that the debt of any portion of the debt is disputed. You can also request the name and address of the original creditor from the debt collection company.

What happens when I dispute debt?

When a debt dispute occurs, the debt collection agency must, by the Fair Debt Collection Practices Act:

cease collection of the debt or any disputed portion of the debt until:
- the debt is verified and a copy of the debt verification mailed to the debtor by the debt collector, or
- a copy of a judgement, the name and address of the original creditor, etc are mailed to the debtor

Because of the debt dispute, the debt collection agency must cease all debt collection efforts until what you requested are mailed to you at their expense. You can also ask for proof that the debt collection agency is licensed to collect debts in your state.

Is adding interest to the debt legal?

Debt Collection Agencies are not allowed, by law, to add interest or fees except those allowed by the original contract or state law. So if a fee or interest is added, it is most likely questionable.