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Debt Disputes

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Having to confront the consequences of outstanding debts can be an upsetting and worrisome experience. Regardless of how one fell into debt – whether from overspending, a medical or family emergency, unemployment, etc. – not being able to repay financial obligations precipitates all sorts of personal, professional and sometimes legal problems.

Sometimes, however, a consumer may be asked to pay a debt that he or she did not incur – or to pay one that is being misrepresented. It can be exasperating to expunge or modify a debt that, because of a clerical error, a mistaken or stolen identity, and/or blatant dishonesty, is not a valid obligation.

The first step in the dispute process is to immediately question the company that sent you the bill and explain why it is in error. By clearing up the mistake as early as possible, you can prevent the account from going to a collection agency.  Similarly, if you see a charge on your credit card statement that is not yours, call your card company and make sure that no one has used your card, or its number, without your authorization.

If you cannot solve the problem at the company level and are still being dogged for debts that you believe are not genuine, there are federal laws that outline how to dispute a debt that you do not rightfully owe. Those laws include the Fair Debt Collection Practice Act; the Fair Credit Billing Act; the Fair Credit Reporting Act; and the Fair and Accurate Transaction Act. Each offers specific protections.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) was passed by Congress in 1977 in response to abusive conduct by collection agencies.

Its purpose is to regulate the behavior of bill collectors, and it does this by proscribing their more egregious practices. Such as:
  • Constant, annoying phone calls at all hours
  • Threats made to enforce payment
  • Abusive language
  • False or deceptive representation

The FDCPA does not regulate an original creditor’s ability to collect a debt. It does regulate those who regularly collect debts owed to others, including collection agencies, lawyers who collect debts and companies that buy delinquent debts.

The FDCPA offers remedies and protections for consumers that can be applied to any debt that is in dispute, including any personal, family, or household debts, debts associated with the an automobile purchase, for retail financing, for medical care, for first and second mortgages, and/or for money owed on credit card accounts.

Specifics of the FDCPA

Under the rules of the FDCPA, you must receive a written notification of a debt. After that, you have 30 days to contact the debt collector – also by letter – and give your reasons why you don’t owe the debt or why the amount is incorrect.

If the debt is yours: And you have already paid it, be sure to include a copy of the cancelled check or bank statement. If you contest the amount of the debt, verification should include information about payments made, and interest and fees charged and/or waived.

If the debt stems from identity theft: Include a copy of the police report. If you fail to respond within thirty days (known as the validation period) to dispute the debt, it will be assumed to be valid.

After receiving your letter, a debt collector may not renew attempts to reclaim the debt until it is verified, and proof of its legitimacy is sent to you. The verification must include the amount of the debt, the date it was supposedly incurred, the name and address of the original creditor if different from the current one, and proof that your account has actually been sold or assigned to the collection agency.

If the required information is not forthcoming, all attempts at collection must immediately cease.

Fair Credit Billing Act

The Fair Credit Billing Act (FCBA), enacted in 1975, deals with billing errors in open-end credit accounts. If you wish to dispute an item on a credit card or charge account statement, you must contact your creditor by mail within 60 days of the statement date on the report that contains the billing error.

After being contacted, your creditor then has 30 days to acknowledge the dispute and 90 days to make corrections or explain why there is no error. Documentation supporting the creditor’s assertions must be made available to the consumer.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA), enacted in 1970, was designed to protect consumers from having inaccurate information of their credit reports. Such inaccuracies can keep someone from obtaining credit, getting a loan, or buying a house.

Under the Act, a consumer must be told if information in his or her file has been used to deny an application for credit, insurance or employment. It also limits the people who may access your credit report to those with a “valid need.” Violators of the FCRA can be sued in federal or state court.

Fair and Accurate Credit Transaction Act

The Fair and Accurate Credit Transaction Act (FACTA), passed in 2003, amends the FCRA by allowing consumers to obtain a free credit report once every year from each of the three nationwide Consumer Reporting Agencies (CRAs) – Equifax, Experian and TransUnion – thus making it easier to find errors or inaccuracies.

If you wish to dispute an item on your credit report, you must contact each of the three CRAs, as they don’t share information. Credit bureaus then have 30 days to decide whether an item should be deleted. Any inaccurate, incomplete or unverifiable information must be corrected or removed. Information that has been verified as accurate can remain.

Despite these federal consumer protections, they are not designed to help you expunge debts that are rightfully owed. Those debts must be paid.

But provisions in the various laws can offer support to consumers for debts that are in dispute. For more information, you can contact the Federal Trade Commission (FTC), which is responsible for enforcement of all consumer protection legislation.

However uncomfortable it may be to have to deal with the situation, when debts are authentic and legitimately overdue, ignoring them is not an ultimately successful option – some sort of action must be undertaken by the debtor to remedy the situation and thereby avoid the grim consequences of default. Strategies like debt settlement and debt consolidation can often help a debtor remain solvent while resolving overdue obligations.

About The Author

Bill Fay

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet.


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  5. The Neighborhood Economic Development Advocacy Project, Inc. (2006). Your Rights Under the FDCPA: Disputing the Debt. Retrieved June 28, 2012, from
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