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Debt Validation Letters Explained - YouTube
Channel: Michael Bovee
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Hi there, this is Michael Bovee
with Consumer Recovery Network
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and welcome back to
our YouTube channel.
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Today, I wanna discuss something
that I've actually been meaning
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to for quite some time,
at least, the kind of video, and
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that is debt validation.
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It's found in the Fair Debt
Collection Practices Act and
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it's an important right.
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There are reasons why you
need to have the ability to
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request validation of a debt.
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Especially today,
with rampant identity theft.
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What if you don't
recognize a debt,
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because your identity's
been compromised?
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Accounts opened up
in your name and
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suddenly now collectors are
calling you and writing to you.
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You had no idea and you had no
involvement, there was fraud.
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This how you can get
to the bottom of it.
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Debt validation is an important
right when you don't recognize,
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necessarily, who's trying
to collect, right?
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So banks, for example,
with credit cards,
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will send out your account
to collection agencies.
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Contingency collection agencies
that just call and write to you
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in an effort to get you to
pay the original creditor.
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Actually, if you were to pay,
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you'd be paying it to the order
of the original creditor.
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Banks also,
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and you need to be able to
recognize if it's a legitimate
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debt collector contacting you
on behalf of your creditor.
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But banks also sell debts
into the open market.
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They sell the legal rights to
collect from you to debt buyers.
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These are investors that pay
perfectly good money to purchase
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up the legal rights to collect
on debts that haven't been paid.
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And it's profitable, at least
enough to keep them doing it.
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And sometimes, it's hard to
recognize who those people are.
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Why are you collecting from me?
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Why do you say I owe you and
I'm paying you now?
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So, debt validation helps you
get to the bottom of that stuff.
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However, it can become
problematic for
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someone who just simply
wants to resolve their debt.
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You know the debt's yours and
you want to get over it.
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You wanna get beyond whatever
financial setback you had in
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the past, you've recovered from.
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Or at least recovered
enough to try and
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resolve each one of your debts,
maybe one by one.
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And there's this, it has been
a push, especially online,
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to describe debt validation as
one of those legal rights that
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you should always,
always follow through on.
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And that's actually not
necessarily appropriate.
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When really,
all you're looking to do is say,
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negotiate a debt or pay it off.
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Obviously, I'm very fond
of debt settlement.
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Especially with debts that
are already in collection,
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because they're
already in collection.
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The damage is all ready
done to your credit report.
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You're not necessarily
getting bonus points
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because you pay off
an entire amount
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owed in collection that is now
inflated with all the fees.
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Negotiating an affordable pay
off is certainly an option
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most of the time.
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I talk about it a lot
on the site and
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on our YouTube channel here.
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But if that's your goal, you
don't need to send off a written
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request to a debt collector
to validate your debt.
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Because it triggers certain
things on their part,
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that you potentially
want to avoid.
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Especially when all you have
to do is pick up the phone,
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call your original creditor and
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verify with them who they
placed the account with.
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In fact, often they're going
to forward you over through
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an automated connection to
that debt collector, or
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tell you who the debt buyer is.
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So you can get your
validation and
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circumvent this whole
written request, but
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I wanna talk about why it
can become problematic.
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So lets say, for example,
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that XYZ Bank has sold your
debt to ABC debt collector.
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Or even just placed it with
a typical contingency collector
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and not sold it.
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They still have the legal right,
they just want someone else to
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try and collect from you for
a time.
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And you send off this
debt validation request.
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What does that trigger that
you might want to avoid?
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Well, the contingency
debt collector may take
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those kind of responses and
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kick those accounts back
to the original creditor.
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Along with there's a legal
question about this account,
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therefore we're pushing
it back to you.
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What happens when that occurs,
often enough, and
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what you may want to avoid
is that bank's legal team.
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They're now going to review
your file, because there's some
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kind of extraordinary kind
of request coming through.
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What does that mean?
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Well, it means that you could
next be contacted by an attorney
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that collects debt.
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That's something that
most of us want to avoid.
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In other words,
you've pushed from you
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want to settle this account,
you want to pay this account.
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From a contingency
debt collector,
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that you may be
typically able to get 30,
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40 cents on the dollar
type of deals from.
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And pushed it over back
to the creditor and
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that deal now may
not be achievable.
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And especially if it's
been pushed out to
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an attorney who collects debt.
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It also can happen where you're
dealing with a debt buyer,
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somebody who bought your
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original debt that's
now charged off.
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And that debt buyer, who may not
grab all of the media initially
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that they need to show your
debt, they may now have to go
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and request that if they want
to continue collecting from you.
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And they do have to do that.
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It's something that you
instigate with your letter.
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That, if they want to
continue to collect from you,
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they have to go out and
get this documentation.
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So that they can, what?
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Prove that you owe the debt?
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Certainly, but also, now that
they have that documentation
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it's the kind of thing
that they need to sue you.
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So, you've just armed the debt
buyer with everything needed
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to press the issue
in your local court
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in order to get you to pay.
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When really, if your goal was
just to negotiate a settlement,
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you could have just
gotten that done.
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So those are some of
the problematic ways you can use
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debt validation, and
again, please understand.
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This video is not about whether
or not you owe a debt and
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you need validation of
that from somebody.
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When there's fraud involved,
like identity theft or
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you're just simply
trying to evade payment,
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which is a legitimate strategy.
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Debt validation, I call it
the debt validation boogie,
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I have for years.
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Doing that dance can yield
to not having to pay a debt.
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Having to go from one debt
collector to the next debt
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collector to the next
debt collector.
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And if that's your goal,
it may or
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may not be accomplished
in that process.
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But this whole everybody
must validate,
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request validation of a debt
from a debt collector.
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When all you really
want to do is,
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just get this one behind you.
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That's really bad advice
in a lot of cases.
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A couple of other things
that I wanna touch on.
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Most of the debt validation
requests that I've
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seen over the years, and I've
been doing this kind of work for
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a little over 20,
are overly broad.
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I mean, I call them
kitchen sink letters.
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Basically because
everything in that letter,
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including the kitchen sink,
is in there.
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When the barrier for
a debt collector to meet
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their obligation to validate
your debt is low enough for
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them to trip over on the way
to the water cooler at work.
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That means that these requests
where you're asking for
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wet ink signatures of your
original credit contract,
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they probably don't exist.
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Because you might have opened
the account online, so
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there is no wet ink signature.
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And the fact that you used the
card and paid a bill establishes
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you knew you were
obligated to the account.
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So all of this stuff that
goes into these letters,
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all this verbose,
two pages of all this stuff.
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It's the kind of thing that
I'm pretty sure started to get
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thrown in there.
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Because it's the kind of thing
that you can request from a debt
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collector when you're being
sued, in the discovery process.
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It's the kind of information
that your attorney is gonna
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ask them to step up
with during litigation.
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And again, most of us
just want to avoid that.
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And debt validation
requests as relates to
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the Fair Debt Collection
Practices Act, that's kind of,
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you're too late for
that if you are in litigation.
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You already have discovery rules
in your state that apply, so
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it's not something
that has its place.
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Having all of this stuff
that you're gonna ask for,
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because it's not even
required of them.
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And the fact is,
again, reiterating,
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you just want to resolve a debt.
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And all of that information is
not something that is consistent
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with that goal.
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So, when you're online and
you're looking at here's a tool.
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Here's something
great I would use to,
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you could use to send
to your creditors or
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debt collectors in request
of debt validation.
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It's not that complicated, it's
actually really, really simple.
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And your goal,
in most cases, for
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people that have a legitimate
concern about whether I owe this
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debt to this debt collector for
this amount.
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Those are the kinds of things
that you're getting to
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the bottom of and
of course, again,
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you can call your creditor,
get that information.
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But this helps me jump into
a major topic of debt validation
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and how I see it being
abused by profiteers.
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The debt validation boogie,
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that dance that I
referred to earlier.
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Where, XYZ debt collector gets
the account, and, years and
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years ago, and even I used to
use this on behalf of customers.
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You could get the account kicked
off to, back to the creditor,
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because the debt collector
got your validation request.
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Creditor gets it and
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says, okay, we'll just push
this down the line and
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another debt collector gets it.
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You send that debt
validation request and
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then it goes back
to the creditor.
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Eventually the creditor sells
it off to a debt buyer,
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debt buyer contacts you.
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You send that validation
request off and
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you look like somebody who is
just not low hanging fruit.
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They wanna collect from people
that have the ability and
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willingness to pay.
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Those two ingredients are what
collectors are limited to.
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That's what they want
to focus their time on.
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And you sending debt validation
request letters means
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you're neither willing or able,
one of the two, or both, to pay.
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So they're gonna spend their
time on other accounts.
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It's not like that anymore,
years ago it was.
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But that debt validation boogie
used to be effective, and
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in some instances it
still can be today.
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But what profiteers do, and what
I consider in a lot of cases to
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be scammers, they build this
entire program of letter writing
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and requests out on
paper,and then they sell it.
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Or they have affiliate
marketers sell it
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as some debt invalidation.
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In other words, they're taking
a known right that's already
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covered and
talked about quite a bit online.
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And stretching it out to mean
something other or to effectuate
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something other than what it
was originally designed to do.
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And they charge
thousands of dollars.
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I just recently have
heard of a few cases.
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One where the guy had almost
about $100,000 worth of debt.
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He had already paid about
$8,000 in fees to this company,
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to invalidate his debt using
these debt validation requests.
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Or at least the premise,
the initial premise of those
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letters that were sent,
were to invalidate the debt.
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And you can't do that, right?
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It's just an extrapolation of
an important consumer right and
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taking it to and stretching it
out to mean something other than
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what it really is
intended to mean.
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And then, banking on the fact,
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that some very predictable
things are gonna happen.
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Your credit card bank
isn't getting paid,
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they're gonna charge off the
debt after six to seven months,
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six months, usually.
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And it's gonna get dropped
into the collection pipeline.
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Consisting of three pipes,
contingency debt collectors,
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debt buyers and
attorneys that collect debt.
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That's what your
bank's gonna do.
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And each one of those instances,
as they happen, they might have
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some special sauce letter
with obviously verbose and
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out of context,
that they might send.
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All in the hopes that really
all you're doing is the debt
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validation boogie.
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And they're having this secret
way of handling this with all of
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these legal questions.
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Ultimately what can happen
is that you just get sued,
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you wasted thousands and
thousands of dollars in upfront
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fees that you're probably
not gonna get back.
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When in essence, all you wanted
to do was resolve your debt that
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you could longer afford.
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But you wanted to do something,
you wanted to be responsible and
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take care of whatever part
you could, at least, afford.
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And that type of process, and
again, I consider it a full
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scam, is not helpful,
it's counterproductive.
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You end up owing more,
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you end up getting sued where
you could have avoided it,
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because of these
letters that go out.
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I want to close with this and
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it's repetitious
because it's important.
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If your goal is
to resolve a debt
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with a debt collector of any
flavor, requesting validation is
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often counterproductive,
but it has its place.
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We have a ongoing discussion
about debt validation on a very
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dedicated page of
the Consumer Recovery website.
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We have the comments below,
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we can engage in
discussion about that.
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It's not a place to
talk about whether or
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not banks lend real money or
fake money.
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It's not a place to talk
about whether debt collectors
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have to meet a certain
obligation for validation.
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It's a place to talk about
whether or not to strategically
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use debt validation as a way
to help you resolve a debt.
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It's a great stall tactic
in some instances,
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backfires in others.
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There's a real good way to go
about using this process when
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all you need to do is figure
out whether you need to owe
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a creditor, a debt collector,
a debt buyer.
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And you can avoid having
to send these letters.
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Michael Bovee,
Consumer Recovery Network.
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See you on the next video.
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