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by Natalie Williams

Two years ago, I had a credit card from Bed, Bath & Beyond. It promised a 20% discount on my first purchase. After I used it, I paid on the card, but I did not realize that I had a two dollar balance.

During the next few months, those two dollars exploded into hundreds of dollars of ‘debt’ to the servicer. The servicer is located in a state where it can get away with predatory loan practices. New York State, on the other hand, does not allow for such predatory loan rates.

I kept getting hit with a $38 monthly late fee. I realized they were trying to sucker me and I spent time trying to straighten it out over the phone (which was for naught). I paid them the two dollars I owed with a bank check. This provided me with proof of payment without having my bank account or credit card number revealed.

Bed, Bath and Beyond never cashed my bank check, something I found out from my credit union six months later. All the while, I kept getting hit with that bogus $38 ‘late fee’ charge. When the amount reached $500, the servicer representing Bed, Bath and Beyond sold my loan debt to another company – Financial Services Inc. (FSI).

In an effort to stop this madness, I asked my colleague, Chet Bottorff, “What should I do?

Chet suggested that I send a certified letter to the new servicer – disputing their claim – but without giving any details.

Chet explained, “Do not touch on any facts of the case. The issue is: Is their claim valid and can they prove it? At the end of your letter, tell them: ‘I am ready to sue’.”

Then Chet told me about ‘The Dunning Letter’.

Various versions of the letter can be found on the internet. The basic tenant of a Dunning Letter is to challenge the validity of one’s supposed debt in writing. The letter is sent by certified mail and in the body of the letter, the sender demands proof of debt. Most of these ‘fly by night’ operations gobbling up debt balances of other companies can’t ‘prove’ the alleged debt.

So far, Chet reports that he’s had 100% success in challenging these predatory companies.

If you do what most people do – and ignore the debt collectors’ letters – they are in the position to claim that they notified you and that you failed to respond. Do not let this happen. This will ruin your credit and stick you with the debt.

Instead, be proactive and ‘nip it in the bud’ by challenging these predatory credit agencies with ‘The Dunning Letter’.

The letter will cost you about $4 for the certified mailing. Be sure to keep your certified receipt!

Here’s an example of what to include in the body of your letter:

“Two weeks ago an FSI agent called regarding a claimed debt.
The presumption of the debt is not valid. Therefore, I dispute the validity of the debt. I do not owe you any money.”

Here are six additional things to mention in the body of the letter:

1. Please send me a copy of the signed contract that I have with you.

2. I require an affidavit, under penalty of perjury, that your records are accurate, correct, and complete and based on first-hand knowledge of the facts. In addition, I demand a certified accounting.

3. Are you licensed to do business in the State of New York?

4. Please provide a certified copy of the debt instrument with my signature.

5. Please provide the aforementioned documents before contacting me by phone again regarding this matter.

6. Also, I want the address of your registered agent for service of process.

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