Consumer Law

When I Dispute A Debt, What Does The Debt Collector Have To Do With My Credit Report?

By M. Stan Herring

Collection agencies and debt buyers (both of these are "debt collectors") love to put debts on credit reports of Alabama consumers because this is so effective at getting the attention of consumers. This is legal and fair as long as it is accurate and true. That's the problem - so often these debts are not owed or the amount is wrong.

So Congress said in the Fair Debt Collection Practices Act (FDCPA) that if a consumer "disputes" a debt, the debt collector (collection agency or debt buyer) must show the account on the credit report as being "disputed" - normally this is shown as "consumer disputes this account".

There is not certainty in this but most courts rule that an oral or verbal dispute is sufficient. The problem, of course, is that there is no proof other than the consumer's testimony. Far better, however, is to send a certified letter (keeping a signed copy) simply stating you dispute the debt. Send it to the collection agency or the debt buyer. You do not have to explain why you dispute it or prove that it is wrong - simply disputing it is sufficient. Of course if you happen to file an answer to a lawsuit denying the allegations, then this is strongest form of a "dispute" anyone could imagine and the debt buyer must correct the credit report if it updates it. This is because....

When you dispute it, some courts say (wrongly in my judgment) that the debt collector has no obligation to tell the credit reporting agency that the account is disputed unless the debt collector updates the account. Many debt collectors update every month. Some don't. At least this much is clear - if you have disputed the account and then the collection agency or junk debt buyer updates the account a couple of months later - without saying "disputed by consumer" - then this may very well be a strong FDCPA and state law violation.

If you have any questions regarding this let us know as we have devoted a large percentage of our practice to suing abusive and harassing debt collectors, particularly as it relates to falsifying credit reports of Alabama consumers.

Full post as published by Alabama Consumer Blog on October 22, 2008 (boomark / email).