- If a debtor disputes the debt, the collection agency must temporarily cease all collection activities on the disputed account until the dispute is resolved.
- Ensure that all actions taken during the dispute resolution process comply with relevant laws and regulations, such as the FDCPA, Fair Credit Reporting Act (FCRA), and any state-specific regulations.
- Collect all relevant information and documentation related to the dispute. This may include account statements, payment records, original contracts, and any previous correspondence with the debtor.
- By law, if the debt is raised during the validation period, a collection agency has 30 days to respond with backup documentation for the collections to resume. Depending on the laws of each state, they may have to close the debt if the backup documentation is nor received from the creditor/client in a timely manner.
- If the dispute is found to be invalid, provide the debtor with clear evidence supporting the validity of the debt. This should include all relevant documentation and an explanation of why the debt is owed.
- If the dispute is found to be valid, promptly correct any errors. This may involve adjusting the account balance, removing incorrect information, or updating records to reflect accurate information.
- If the dispute involves credit reporting, ensure that any necessary corrections are made to the debtor’s credit report. Notify the credit reporting agency of the resolution and any changes that need to be made.
- If the collection agency hears from debtor’s attorney, the debt is classified as highly disputed / litigious. They should re-evaluate the debt and consult with client if needed to move this account for legal or to close the debt entirely.
- Ensure that all staff members handling disputes are well-trained in the company’s dispute resolution procedures and relevant legal requirements. Regular training sessions can help maintain high standards of compliance and effectiveness.