When is it morally right to duck debt?

WASHINGTON, D.C. » There are times when you can be right but still wrong.

During one of my recent online chats, a reader wanted to know if a sibling was doing the right thing regarding his debt.

“My brother has been sharing information with me about debt collectors,” the person wrote. “When you have an original debt and it is written off by the company or sold to a debt collector, how do you feel about requesting that the company show you the burden of proof that they now actually own the debt?”

The reader’s brother has been challenging debt companies to verify that the debts are in his name.

“When the companies can’t, he fights to have the debts removed from his three credit reports,” the reader wrote.

Let me clear up some common misunderstandings about debt collection.

When you stop paying on a debt — credit card, medical bills, auto loan — the original creditor may hire a company to collect the money for them.

However, if this collection process fails, the creditor may eventually write off the debt as uncollectible. But to recoup some of the lost money, the creditor may then sell the rights to collect the debt to a debt buyer.

Debt buyers pay pennies on the dollar for old debt. Let’s say a borrower owes a credit card company $2,000. A debt buyer might purchase the right to collect it for $80 — or 4 cents on the dollar. This company then becomes the owner of the debt, which may include the original defaulted amount, interest and penalties.

The Fair Debt Collection Practices Act provides certain rights for debtors. For example, debt collectors can’t lie. They can’t say they’ll take you to court and garnish your wages unless they are allowed by law to take the action and intend to do so.

As for the reader’s brother, he does have the right to ask for proof of what he might owe. Besides, there are a lot of debt-collection scams, and so it’s smart to be on guard.

By law, the debt-collection firm has to tell you how much you owe and the name of the creditor within five days of the initial contact. If you send a letter disputing the debt or asking for verification, the company has to stop contacting you. You have to send the letter within 30 days after you receive the validation notice. However, the company can start the collection process again if it sends written verification.

Consumer advocates have been fighting to get court judges to demand greater proof from debt buyers before allowing them to sue consumers to recover the alleged obligations. The debt buyer may only have the person’s name, last known address, Social Security number and debt amount.

Often there are no key files, such as billing statements or a contract from the original creditor with a consumer’s signature. It’s highly probable, if your debt has been sold and resold, that the last man standing doesn’t have adequate documentation that the debt is actually yours.

Human Rights Watch issued an 80-page report two years ago arguing that debt-buyer lawsuits can be riddled with errors. In “Rubber Stamp Justice: U.S. Courts, Debt Buying Corporations, and the Poor,” the advocacy group examined the way courts handle debt-buyer lawsuits.

“Debt buyers have sued the

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