Is Your Lender Trying to Collect on a Loan You Already Paid?

On your payday loan’s due date, you paid your obligation in full, including finance charges. Needless to say, when you were contacted by a lender or collections agency that demanded repayment for the same loan, you were a bit surprised. Unfortunately, this happens more than most borrowers realize. Lenders either deliberately or inadvertently try to collect the same debt more than once. Although the lender’s motives are rarely sinister, you’re still left with the burden of trying to convince the lender that you’ve already paid the debt in full…or are you? According to the Fair Debt Collection Practices Act, the onus of verifying the debt’s legitimacy is actually on the lender. Read on for more information.

Stopping Contact

You may want to speak with your lender or collections agency at least once to see if you can resolve the matter over the phone. Some lenders may drop the issue if you tell them when and how you repaid the debt in question. If you cannot resolve the issue over the phone and do not want the debt collector to contact you again, you must send a letter to the collections agency or lender expressing your wishes. After you make a copy of the letter for your records, send your letter via certified mail and request a return receipt to verify that the collector receives the document. After receiving this letter, the debt collector can only contact you once more to say that contact will cease henceforth or to inform you of their next course of action.

Debt Verification

If you are certain that the lender is trying to collect on a debt you’ve already paid, you will need to go through a similar process as the one described above. However, when you send your letter to the debt collector, you must state that you do not owe any money and that you would like verification of the debt. The letter requesting verification must be sent within 30 days after receiving the debt validation notice. Include copies of any supporting documents in your letter, such as returned checks, bank statements, receipts, and any other proof you may have that the debt was indeed paid. At this point, the lender must stop contacting you unless it can provide written verification of your debt, such as a copy of the loan you owe.

The Credit Bureau Approach

You also have the option of disputing the debt with the credit bureaus if the loan appears on your credit report. Typically, once a loan goes into the collection stage, it will appear on your credit report. You can dispute the item in writing with all three of the credit bureaus, and they are then obligated to investigate the legitimacy of the debt within 30 days. The item will be removed from your report if the bureau finds the debt to be invalid.