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Debt Consolidation Facts

1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair Isaac).

2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% - 30%!

3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.

Dispute Debt after Receiving the Debt Validation Forms - Invalid Debt

Use this letter to dispute debt you think is still invalid even though the debt collector has sent you documentation claiming they are validating the debts. According to the Fair Debt Collection Practices Act:

"If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector."

Source: 15 USC 1692g, Section 809(b): Validation of Debts

Let us summarize the above clause. Debt collectors have to provide you with ONLY 1 of the following 3 proofs in order to validate the debts:

1) Verification of the debt
2) Copy of any court judgement
3) Name & address of the original creditor

This means if the debt collector tells you the name & address of the original creditor, he is fulfilling the requirements of the Fair Debt Collection Practices Act (FDCPA). If you do receive the original creditor's name and address, call them up and ask to verify the debt to the best extent possible. For example, if a debt collection agency is collecting on behalf of Sears, you know you did buy goods from Sears and owe them money. You should then call up Sears and ask for the exact amount that you owe. Here is a sample list of questions to ask the original creditor:

1) When the account was set up
2) Last payment made on the account (this affects the Debt Collection Statutes of Limitation period)
3) When the account was charged off (sold to debt collector)
4) If the original creditor still owns the account

If at this point you still feel the debt is invalid, use the sample letter below to dispute it. Click here to get an MS Word format version of this letter. A .doc file will open up and save it to your Desktop. This way you can easily retrieve the file.

Today's Date

Your Name
Your Address
Your Phone #

Debt Collector's Name
Debt Collector's Address

Re: Account #

Mr/Mrs. Debt Collector,

This letter is to inform you that I still dispute the above referenced debt. After receiving your verification of my original debt validation request, I contacted the original creditor of this debt who could not prove that the account was mine. Thus taking this into account, I think you have failed to validate the above debt.

I want to inform you that I originally disputed this debt within the 30 day dispute period provided by the Fair Debt Collection Practices Act (FDCPA). Once again, I am sending you this letter in a timely manner and since I consider this debt as "Still in Dispute", I do not expect a phone call from you at my home, work or anywhere else. The only time you are allowed to call me is if you provide proof or documentation validating this debt.

You should know that I will be taping any more phone calls received from you and report you to the Federal Trade Commission and to my State Attorney General. If I receive a harassing debt collection phone call from you, remember you can be charged up to $1000 per every harassing phone call. You should also know that I am willing to take whatever necessary legal action to protect my rights as a consumer.

(Your Signature)
(Your Printed Name)


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