Getting a collection notice in the mail is never a fun thing. But it’s also not a reason to panic. In California and other states, there are very strict rules about the proper way to prepare and distribute a collection notice. So if you receive one, I recommend investigating the following factors before taking any action.
Is the debt valid?
There are certain factors which may render a debt uncollectible. For example, the debt might be very old and the time for collecting on it may have passed. Also, the individual who receives the notice might not be the actual account-holder. Cases of mistaken identity are not uncommon, especially when the supposed debtor has a name like “John Smith.” With all the John Smiths in the world, the John Smith who gets the collection notice may very well not be the John Smith.
Does the collection agency have the authority to collect?
Don’t assume that the collection agency that sent the notice is authorized to collect on your debt. It may have improperly acquired the right to act as a collection agency from the original creditor. Also, the agency must be licensed to collect debts in the state in which the account holder lives.
Is the form of contact legal?
In California, the Rosenthal Fair Debt Collections Practices Act lays out specific guidelines for what a collection notice must contain: the name and address of the collection agency, adequate information identifying who the agency is collecting for, the precise amount of the debt and appropriate disclaimers and notices of the account holder’s rights.
What to do next
First, and foremost, do not ignore the notice and just throw it away. In most cases, if you do not challenge the validity of the debt claim within thirty (30) days of the date of the notice, it is presumed valid, even if there is any issue (e.g. wrong person, severely aged debt, etc.). If there’s a problem womans health with compliance regarding any of the above questions, the collection activity might be ruled invalid. In such cases, I advise clients to notify the creditor (either on their own or through an attorney) to inform them that they are challenging the validity of both the debt itself and of the collection agency’s practices.
Even if you do owe a debt, it’s always good to make the collection agency demonstrate that the debt is genuine and that they have the authority to collect on it.
In your challenging notice, ask for the following:
- Any documentation showing that the account being collected on was actually created and authorized by the account holder (in the form of a credit application, contract, promissory note, etc.)
- A transaction history showing that the amount being collected on is actually the amount that is owed
- Any documentation showing that the collection agency has the authority to collect (as demonstrated by an assignment of rights signed by the creditor or a purchase contract between the agency and creditor)
- Any judgment which have been tendered against the account holder, relating to the account, if any exist
If the collection agency has been overly aggressive in its tactics—either through harassing telephone calls or in-person visits—the challenging notice can include a cease-and-desist demand, requesting that the collection agency stop all verbal or any non-written communication. There is no reason an account holder must submit to harassing collection procedures.
As I said, it’s never pleasant to receive a collection notice. But there are things you can do and services an experienced attorney can provide. Don’t take action without fully investigating your options.
Are you in need of legal assistance regarding a debt or receipt of a collection notice? The Law Offices of Ian S. Topf offers a free consultation in a variety of issues, ranging from debt collection defense, bankruptcy, family law, estate planning, and DUIs and civil matters.