Knowing whether you can challenge collection debt is an important part of managing your finances.
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When a debt goes unpaid for long enough, it can move through a series of hands, first the original creditor, then a third-party debt collector and sometimes even multiple agencies afterward. Each transfer can make the situation feel more confusing and more intimidating, though, especially when new names and account numbers appear on your credit reports or in mailed notices. And because debt buyers often purchase accounts in bulk, the information they receive isn't always complete or accurate. That, in turn, leaves many borrowers wondering whether they still have the right to question the validity of the debt.
That's a big issue in any economic environment, but it's an especially relevant one right now. After all, debt collection activity has picked up recently, thanks in large part to interest rates remaining elevated, inflation pinching household budgets and more Americans leaning on credit cards to bridge their budgetary gaps. As a result, the number of borrowers with accounts in collections has been climbing, a trend that's pushing many people to re-examine which debts are truly theirs and which may contain errors.
If you're one of them, knowing what debts you can dispute is increasingly important. For example, you'll need to know if it's too late to challenge a debt if a collection agency now owns the account. The answer to that question could be the key to stopping an invalid debt from following you.
Find out how to start the debt relief process today.
Can you dispute a debt after it was sold to a collection agency?
You have the right to dispute a debt, even if it was sold to a collection agency. The Fair Debt Collection Practices Act (FDCPA) gives you the explicit right to dispute any debt a collection agency claims you owe, regardless of whether they're the original creditor or a third-party buyer. This protection exists because debt sales often involve incomplete or inaccurate records, and borrowers deserve the opportunity to verify that what debt collectors are claiming is actually legitimate.
When a debt collection agency first contacts you, they're legally required to send a validation notice within five days. This notice must include the amount of the debt, the name of the original creditor and a statement explaining your right to dispute the debt within 30 days. This 30-day window is critical. If you send a written dispute letter within that timeframe, the debt collector must stop all collection activities until they verify that the debt is valid and that they have the legal right to collect it.
Your dispute letter doesn't need to be complicated, either. You can state in the letter that you're disputing the debt and request validation and then send it via certified mail with return receipt requested so you have proof of delivery. Once the collector receives your dispute, they must provide documentation such as the original contract you signed, an accounting of payments made, and proof that they own or have been assigned the debt.
Many debt collection agencies struggle to provide adequate validation, especially for older debts that have been sold multiple times. If they can't validate the debt, the debt collection agency is prohibited from continuing collection efforts or reporting the debt to credit bureaus. This can effectively make the debt uncollectible, even if you technically did owe money at some point.
Learn what strategies can help you get rid of your unpaid debt now.
What to do if the debt is valid
Sometimes you'll dispute a debt and discover it's completely legitimate. You really do owe the money, and the debt collection agency has all the documentation to prove it. In these situations, ignoring the debt won't make it disappear. The debt collection agency can still pursue legal action, potentially leading to wage garnishment or bank account levies over time.
This is when professional debt relief options may become worth exploring. Debt settlement programs, for example, which are also referred to as debt forgiveness programs, work by negotiating with collection agencies and other creditors on settlements that are less than the full amount owed. Since debt collection agencies typically purchase those debts for a fraction of their face value, they're often willing to settle for as little as 50% of what's owed (or even lower in some cases) to avoid getting nothing at all.
Credit counseling agencies are another option, as these nonprofit organizations can help you build a debt management plan that consolidates multiple accounts into one structured repayment plan with reduced interest rates and fees. While you'll still pay back the full balance owed, once creditors agree to the plan, the lower rates you get in return can make the debt more manageable and stop collection activity.
Debt consolidation is another option worth considering, as it can help you better manage what you owe to multiple collection agencies. By rolling various debts into a single monthly payment at a lower interest rate, you can create a more manageable path to becoming debt-free.
The bottom line
Don't let debt collection agencies intimidate you into paying debts you don't owe or can't verify. You have clear legal rights under federal law to dispute any debt a collector claims is yours, even after your original creditor has sold the account. Exercise those rights by requesting validation within 30 days of first contact, and don't make any payments until you're confident the debt is accurate and legitimate. If the debt turns out to be valid but overwhelming, exploring debt relief options can provide a realistic path forward that protects your financial future.
Edited by Matt Richardson
