Disputing a debt won’t make it go away

Of all things regarding “debt relief” that piss me off, none do so more than false advertising and demonstrably false claims. I’ve addressed a lot of claims from “debt relief” programs in the past and the false claims they make, such as “you have a right to settle your debt for a fraction of what you owe”.

So let’s tackle this one from “American Debt Enders” and their “Debt Dispute” program. I just saw an ad for it today, but looking at Archive.org, this appears to have been around since October 2014, first called their “Credit Shield Program” (or “Alternative Debt Relief”) before changing the name to “Debt Dispute” in March 2016. The latest incarnation of the program (as of this writing) says this:

This approach to debt relief requires debt collectors to provide proof that a debt is 100% Legal, Collectable, Valid and Verified, or Cease Collection Efforts!

Debt Dispute is not a “Debt Settlement” program, modification, or negotiation.

At least they removed the claim about their program being “FTC Approved” (yes, they actually claimed that), but kept the idea that their program “requires debt collectors to prove that a debt is 100% legal, collectable, valid and verified”.

So you sign up, hand them notices from debt collectors, and they’ll make those debts go away or you owe them nothing? Yeah, no. As we’ll see going through the fanciful claims they make, they are promising a lot that just isn’t possible, making demonstrably false and wildly misleading claims.

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So I spent a little time going through their website to figure out how this program works. Up front it’s apparent this program is only for debts that have only just fallen into collections and for which you are still within 30 days from receiving first communication from the collection agency:1Credit Restoration and Debt Dispute – American Debt Enders

When a consumer enrolls in the Dispute Program, they give authorization for a representative to communicate on their behalf… Because the client has appointed the authorized representative to do so, the representative will put together a dispute under various laws that pertain to the collection of debt. The authorized representative will serve it as a notice on the debt collector within the 30 day dispute time frame as stipulated in the Fair Debt Collection Practices Act.

So… basically they’re just sending a letter to the creditor within the 30-day time frame. Okay… So if you’re outside the 30-day statutory time frame, I guess you’re out of luck with this program. But do you really need to hire a firm like this to dispute your debts with your creditors? No. It just takes understanding your rights plus a little initiative, and keeping your expectations in check.

The dispute is witnessed by a notary and sent to the debt collector registered U.S. Mail return receipt requested, also done by a notary, to ensure proper record of the dispute by a state official. This process is known as a notary presentment. The entire process takes between 18 and 24 months to complete. The cost is about half of the cost of any debt settlement program.

Notaries aren’t state officials, for one. And notary presentment is unnecessary here. It is added expense with zero additional benefit. USPS Certified Mail® with Return Receipt is what’s generally recommended and all you need. In other words, you can easily do on your own what they’re going through a notary to do.

And just given that they say this program is available only for those still within the 30-day statutory time period, has anyone actually taken advantage of this program? I’m very much doubting that.

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American Debt Enders explains their dispute program through a two-part article series. Before going into those articles, there’s something I want to point out. The two articles were written in May 2016. About 18 months after they first started offering their “Debt Dispute” program. Keep that in mind given the wild claims they make in those articles.

The first of the two parts doesn’t really provide any elaboration on the program, though at the end they do say this:

The following information must appear on all notices for collection sent to a consumer. “…unless you dispute this debt within 30 days of receipt of this letter, we’ll assume the debt is valid.” Please notice the word Assume. If all debts were valid without assumption than their [sic] would be no need for any laws governing the rules for dispute.

Federal law is what allows them to assume the debt is valid if you don’t dispute it within the 30-day statutory period.215 USC § 1692g(a)(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;” Federal law also provides that the failure to dispute the debt cannot be construed as an admission of liability.315 USC § 1692g(c) – “The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.”

This implies a burden of proof and who has it. If you dispute the debt within the 30-day period, Federal law puts the onus on the debt collector to demonstrate the debt is valid and the amount claimed is correct, while also declaring they must cease all collection activities while attempting to validate the debt. After that 30-day statutory period, the burden of proof falls to the debtor to demonstrate that the debt is not valid (paid off, forgiven, wrong person, etc.) or the amount claimed to be owed is not correct. But the debt collector no longer has a statutory obligation to stop collection activities.

This is why it’s important to get a debt dispute to the debt collector within the statutory time period. It puts the burden of proof on the debt collector, and keeps your options open for further disputing the debt even after they’ve returned validation.

Moving on.

Can I get harassing creditor phone calls to stop. The answer is yes. Again, a well crafted dispute program will have this aspect as part of the program. However, we can tell little Johny to play nice in the sandbox and even punish him if he does not, but he still may not listen. Some people actually benefit in cash and large sums of it, if the creditor continues to call after you have followed the law and told them to stop. Again, a well crafted dispute program will have this as part of its program.

It’s actually a simple written letter you need to get them to stop calling you. You don’t need a “well crafted debt dispute program” to invoke that. Indeed my letter template includes it. Now while it’s possible they’ll ignore your written request, they open themselves up to liability doing that, under both Federal and State law. And debt collectors have time and again been successfully held liable through the Court.

Bear in mind that such liability does not erase the debt they’re trying to collect.

What happens if the debt collector simply says go jump in a lake, and ignores your requests for verification? This is an excellent question and one which is often asked. If the creditor does not respond, they have in fact violated your rights and invalidated the debt themselves. This is a home run for you.

If the debt collector does not respond to validation, they have not violated your rights in the least unless they attempt to continue collection while there is an unresolved debt dispute in play.

It’ll also be rare that a debt collector will not return validation. Bear in mind as well that there is no statutory time limit to how long they have to return validation. So they haven’t “invalidated the debt themselves”. The law only requires they cease collection activities while the dispute has yet to be resolved.

And it is possible the validation request will cause a debt collector to not bother. It’s most likely to happen with debt accounts that have been passed between several debt buyers, since that increases the likelihood even the original creditor no longer has record of it. It actually happened with one account I had a long while ago. Where instead of validating the debt, the debt buyer sold it off to someone else – yes, they can do that under the law.

And it hopped between a couple debt buyers, each one not returning validation when I disputed, before one of the buyers actually bought back the account and initiated communication on it as if they had never seen it before. So I had to remind them in writing that I’d already disputed the debt. Never heard from them again. And I don’t believe the account went anywhere after that either as I don’t recall ever receiving any communication from them or anyone else about it.

But if you’re talking about a debt that has newly fallen into collections, expect them to return validation.

What happens if the debt collector provides proof of the debt, and their right to collect it? While this is a rare occurrence, you are not charged any fee for the work done on your behalf for that debt, and your assigned attorney will come to a settlement on that debt.

Rare, my ass. It’s happened nearly every time I’ve exercised validation.

Do not delude your readers and prospects into thinking that sending a §1692g validation request will almost always result in never hearing from the debt collector again. To say such is absolute bullshit and may qualify as fraud given the services you offer, even despite your “100% guarantee”.

What Happens If I get sued? Sometimes debt collectors do not respond and they may even be as bold as to file a lawsuit against you. Because this action and many other actions against you are violations of federal law, we have an organization that will assist you in holding the debt collector responsible which usually results in the suit being dropped and the alleged debt forgiven. The aforementioned process is done outside of court through notification and negotiation.

The lawsuit or any other collection activity is a violation of Federal law only if it interferes with a debtor’s statutory right to debt validation. But once they file a lawsuit and the debtor is served with the summons and complaint, everything to dispose of that lawsuit must occur through the Court, contrary to your assertions.

There are a few details here that many don’t realize. First the lawsuit to enforce the debt will be filed with your creditor as the plaintiff, not the debt collector – e.g. Capitol One Bank v. Kenneth Ballard4Case No. 09CY-CV13306, Missouri 7th Judicial District (2009). This was when one of my creditors sued me.. This means if you believe the debt collector violated your rights under the Fair Debt Collection Practices Act, you must file that lawsuit separately naming the debt collector specifically as the defendant. Your answer to the lawsuit cannot allege Federal or State law violations by the debt collector since the debt collector is not the plaintiff.

Many are quick to dismiss, or flat out ignore, that the debt collector and the creditor they represent also have rights under the law, including the right to the Court to enforce the debt. And FDCPA violations by a debt collector do not bar a lawsuit by or on behalf of the creditor to enforce the debt. Too many think otherwise. And too many articles say otherwise, in one way or another, with it all generally boiling down to FDCPA violations voiding debts. One article I encountered even said that a “small clerical error is enough to get your debt completely erased.” No it isn’t.

Now is it possible to get a judgment against a debt collector that surpasses the amount attempting to be collected? Yes. But don’t bank on it. It typically requires some rather egregious conduct.

On top of any actual damages (demonstrable losses such as lost wages, reimbursements for injuries such as “psychological distress”, etc.)515 USC §1692k(a)(1) – “any actual damage sustained by such person as a result of such failure [to comply with the FDCPA]”, statutory damages are capped at $1,000615 USC §1692k(a)(2)(A) – “in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000”, depending on some details about the violation(s) in question715 USC §1692k(b)(1) – “the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional”. You’re not getting anything at all if the alleged violation was not intentional and resulted from a bona fide error815 USC § 1692k(c) – “A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” regardless of any losses or injuries sustained, or was conduct performed in good faith based on any advisory opinion or publication by the CFPB915 USC §1692k(e) – “No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Bureau, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.”. And even if there is a pattern of misconduct for which a United States District Court awards damages, those damages are unlikely to be enough to overtake the debt, and your lawyer is more likely to win out on it than you, since plaintiffs aren’t supposed to profit through a lawsuit.

So this means if a debt collector does turn around and sue you rather than responding to the dispute, you’re entitled to reimbursement of all losses associated with that, which does not include the amount the debt collector alleged is owed, which can get rather costly for them. But that doesn’t stop the lawsuit from continuing. And, again, you’re entitled to nothing if the debt collector can show their actions were the result of a bona fide error.

And if the debtor has someone representing them to the debt collectors, violations of the FDCPA actionable through the Court are unlikely to occur since they shouldn’t be talking to the debtor directly. That is, unless whomever is representing the debtor tries to stonewall discussions, in which case the debt collector has every right under the law to seek them out.1015 USC §1692c(a)(2) – “if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer;”

As such, I very highly doubt “the suit being dropped and the alleged debt forgiven” is a common outcome. I’d be surprised, actually, if it’s happened at all.

Bear in mind, too, that the Supreme Court of the United States ruled in 2017 that the statutory definition of “debt collector” does not apply to debt buyers, and so debt buyers are immune to most (if not all) of the provisions of the Fair Debt Collection Practices Act. And you have one calendar year from the date of the alleged FDCPA violation to file a lawsuit.1115 USC § 1692k(d) – “An action to enforce any liability created by this subchapter may be brought…within one year from the date on which the violation occurs.”12“That language [of §1692k(d)] unambiguously sets the date of the violation as the event that starts the one-year limitations period.”, Rotkiske v. Klemm, 589 US ____ (2019)

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Time to inject some reality back into this. So what happens when an account falls into collections?

The collection firm will initiate contact with you. They may try calling you first, but you will always receive notice in the mail pursuant to 15 USC § 1692g(a). Once you receive that written notice, you have 30 calendar days to exercise your statutory right of debt validation. Note: 30 calendar days to postmark the dispute letter. This is your chance to dispute the debt either in part or in full. And you should always dispute the entirety of the debt initially. You can always dispute the exact amount further. Send the dispute letter via USPS Certified Mail with a Return Receipt.

After they receive the dispute, they must cease collection efforts until they resolve the dispute by providing documentation that proves the debt is real and the amount claimed (or some portion thereof) is valid. And what they must provide to validate the debt isn’t much and has already been clarified by United States District13“No provision of the FDCPA has been found which would require a debt collector independently to investigate the merit of the debt, except to obtain verification, or to investigate the accounting principles of the creditor, or to keep detailed files.” —Azar v. Hayter, 874 F.Supp. 1314 at 1317 (N.D. Florida, 1995) and Circuit14“[V]erification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. Consistent with the legislative history, verification is only intended to “eliminate the … problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid.” There is no concomitant obligation to forward copies of bills or other detailed evidence of the debt.” (internal citations removed) —Chaudhry v. Gallerizzo, 174 F. 3d 394 at 406 (4th Cir., 1999) Courts.

There are three outcomes possible from a validation request:

  1. you never hear from the collector again,
  2. the collector provides documentation showing the entire originally-claimed amount is valid, or
  3. the collector provides documentation showing only part of the originally-claimed amount is valid.

Again, there is no statutory time limit to how long the debt collector has to return validation. And how quickly they return with validation will depend on several factors.

If they come back with (2), then you can negotiate payments on the amount, or decide to try to dispute the amount further, countering with any documentation you have. And, again, contrary to what American Debt Enders falsely asserts, it isn’t “rare” this happens.

But what if they come back with (3)?

Obviously the debt collector may only collect what they’ve validated. But American Debt Enders implies they cannot collect any of it – “provide proof that a debt is 100% Legal, Collectable, Valid and Verified, or Cease Collection Efforts!”. That they must validate the entire originally-claimed amount and cannot collect any lesser portion thereof even if they can show the lesser amount is valid.

And that is not true.

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If you fail to dispute the debt within the statutory time frame, the debt collector can take that as reason to believe the entire claimed amount is valid and they have found and contacted the right person. So if you’ve fallen outside the statutory time limit and want to dispute the debt, can you still do so? Absolutely. What you lose, however, is the statutory obligations the debt collector return validation and cease collection activities while validating the debt.

Now if you believe the amount the debt collector claims you owe is higher than the amount you actually owe, then you can certainly try to dispute the amount further by providing documentation to that effect. After all, you should never pay more on a debt than what you actually owe according to the contract.

But if the amount the debt collector original claims isn’t correct, is the collector now barred from collecting any of the amount claimed? Absolutely not. The amount that is demonstrated to be owed is the amount they will attempt to collect.

And that is where American Debt Enders strays into false advertising.

A debt collector is not required to cease collection efforts on the entire debt if they cannot demonstrate the validity of 100% of the amount originally claimed. They must cease collection efforts on what cannot be validated, but can continue collection efforts on the remainder. This is why it’s important to dispute the debt in its entirety up front as noted above. But disputing the debt in its entirety does not mean the debt collector must then validate the entire amount or none of it is in play.

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American Debt Enders also seems to gloss over is the fact a debt collector always has the right to take you to Court.

Well they don’t entirely gloss over it. They do get the terms horribly wrong, though: “Provision for an Attorney in your State to answer a subpoena if you are served one from any of your creditors.”

Where they say “subpoena”, they clearly mean a “summons” or “lawsuit”. Now it isn’t uncommon for lawsuits to be improperly served. But contrary to what they claim in another article on their website,

First, the [summons or lawsuit] problem. Not to worry. Did you know that most [summons or lawsuits] can be discharged without you ever going to court! Yes, because most are improperly served it is an easy matter to discharge them. So, you can solve this problem by making a free phone call to a consumer advocate who is knowledgeable in this area.

there is no way to get rid of that without going to Court.

Since, for starters, “going to Court” doesn’t mean just being in front of a judge. There’s a lot more that occurs at Court that doesn’t involve a judge and courtroom. In fact, most of what happens at Court doesn’t involved a judge and courtroom.

Second, you can’t get rid of anything from the Court served to you, whether a subpoena or summons, without you or someone representing you going to the Court to provide some kind of answer to it. When I was demonstrably improperly served in a case of mistaken identity for a foreclosure, an “affidavit of identity” was my “answer” to the summons.

Once your creditor takes you to Court, your options shrink dramatically. The only way you’re getting away from that lawsuit is if you don’t actually owe the alleged debt. You can certainly dispute the validity of the debt, especially if you’ve failed to get them to accept documentation showing you owe only part of what is claimed. But whatever part is shown to be valid and still outstanding is what you’ll ultimately owe, including Court costs and attorneys fees, with a Court judgment backing it up.

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So how to wrap this up…

Let me put it this way: anyone who tries to sell you on a program that promises to just magically make your debts go away is lying to you. As such, American Debt Enders is lying to you. That they once claimed their program is “FTC Approved” shows they are not above making fraudulent claims to reel people in.

Their “debt dispute” program won’t do what they claim. That the program is only available to those still within the 30-day statutory time frame dictated by Federal law also makes me wonder if anyone has actually taken advantage of that program. Since by the time most are seeking out debt relief programs, they’re likely well beyond that statutory time period.

So, yeah… If you have actually been through their “debt dispute” program, I’d love to hear from you. But be prepared to provide documentation as I’m not going to accept mere assertion. Since given everything I know about debt collections and the laws governing it, along with my own experience with debt collectors, there is no possible way the claims that American Debt Enders makes can come to fruition.

Going through their “debt dispute” program, or any debt relief program, won’t result in your debts just magically disappearing. And anyone who tries to tell you that theirs will is selling snake oil.

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Update – February 2021: American Debt Enders appears to have gutted their site. The page for their Debt Dispute Program is now little more than a bunch of nonsensical text. It’s possible they’re in the middle of revamping their website, but it’s definitely clear they’ve realized their original claims were far outside reality.

Of course that makes me wonder if this article is the reason they’ve shifted their site so much. It’s possible, or they were contacted by regulatory agencies. Or someone within the organization wised up and realized they were putting out false promises. Whatever the case, hopefully they won’t try to, at least, publicly claim to be able to make your debt go away merely by issuing a §1692g validation request.

Correction to previous update: I looked around their site a little bit more, and they’re making much the same claims as before. It was under the page called “Credit Restoration“, not “Debt Dispute”. (The latter is the above screenshot.) They’ve removed much of the problematic and fanciful claims.

They retain the limitation that the program is only available “within the 30 day dispute time frame as stipulated in the Fair Debt Collection Practices Act,” meaning it’s largely worthless to those who typically seek out credit counseling. And they still keep the overall implication that they can make your debts go away through a simple §1692g validation request.

I think I need to write a separate follow-up to this.