What Is a Collection Dispute Letter and How to Write It?

What is a collection dispute letter?

A collection dispute or debt dispute letter is a letter that demands the collection agency to show proof that you owe a certain amount of money to the mentioned account.

As per federal law, the consumer gets a 30-day window from the day of receiving the letter to respond to it. 

In most cases, the dispute gets resolved within the stipulated time. A copy of the dispute letter can also be sent to leading credit reporting agencies to notify them about the matter. This will help you maintain your credit score intact. If your credit score has been negatively impacted due to the erroneous collection letter, you need to send the credit agencies a separate dispute letter to rectify the mistake.

What parameters should you include in a collection dispute letter?

The collection dispute letter to debt collectors should include the following information:

• Your details – name, address, official email address, etc.
• Request for more information about the creditor
• Amount of debt owed
• A request note to not to report the matter to the credit reporting agency until the matter is resolved

Sample letter for a debt collection dispute

Here we provide you two collection dispute letter templates to give you an idea of how a dispute letter is outlined.

Sample dispute letter for credit reporting agency

What not to do when you receive a collection letter?

Receiving a collection letter, especially when you have cleared all your dues, can be a harrowing experience. But ignoring a collection letter and not responding to it can create further problems.

Here are some actions that you should not take when you receive a collection letter.

1. Ignore the debt collectors

Ignoring the debt collectors might put you in a difficult position since they might use it against you during legal proceedings. Whether you owe money or are falsely implicated, you should never neglect their phone calls and always acknowledge their concerns. Reply promptly to debt collectors and dispute any debts that are not yours within 30 days of receiving the collection letter. Keep copies of the debt dispute letter as well as postal receipts for proof.

2. Lose proof of conversations

It is better to communicate with the debt collectors via writing (preferably e-mail or physical mail) instead of phone calls to keep a written trail. If you communicate via phone call, don’t forget to record the conversation after informing them of your intent to record and taking the consent of the involved parties.

3. Fall in the trap of debt collectors

Not all collection letters are genuine. Confirm with your team if there are any open invoices that need to be paid. If there are no outstanding payments from your end, the collection letter could be a case of fraud. If it is a genuine collection letter and you need more time for repayment, you can always ask for it. But do not agree to any of their demands without double-checking all the details.

Conclusion

It is prudent to clear your dues on time and stay safe from the methods used by third-party debt collectors to collect debts. If you pay your dues on time, you’ll likely never get a dispute message from the credit agency, and you will not have to deal with any hassles. Use calendar notifications and ‘pay now’ buttons in the invoices and email reminders to clear debts on time.

Not repaying a debt can hamper your credit score and potentially damage your credit reports. If you fall into a collection dispute issue, always comprehend what steps you need to take to avoid legal complexities. Writing a good collection dispute letter is the first step toward clearing your stand on the matter and upholding your brand reputation. In case the matter doesn’t get resolved amicably, you may even want to consider the legal route to protect your business interests.

Here are some other articles that can help you:

1. What Is a Credit Dispute Letter and Its Different Types?
2. How to Improve Collector Productivity by 75?
3. What to Say When Making an AR Collection Call?

FAQs

Q1. What is the best way to dispute a collection?

The best way to dispute a collection is by sending a debt dispute letter to the collection agency and asking for the debt to be validated. 

Q2. Will removing a dispute hurt my credit score?

No. Acting on dispute items does not affect the credit score. However, if it is found that the negative item on your report is verified, then the credit score might take a dip.