Mitigating credit impact of collection agency letter

November 10, 2009 7:24 AM

I received a letter yesterday from a collection agency: I was late in paying a bill for a $10 copay. I actually did put a check in the mail for what I think is this same bill last week, but it looks like it was too late and they've turned it over to this agency. It's only $10, so I'm not worried about paying it (or even paying it twice). What I am worried about is my credit score. The letter says "This account will be reported to the credit bureau in 45 days if not paid in full." Does that mean that if I pay the bill quickly, it won't affect my credit score? Or will paying the $10 somehow be admitting that I deserved to have it turned over to a collection agency? Would it would be better to call the original company and ask them if they received my check and whether they can call off the dogs? Basically, what I want to know is: Is there any downside to paying this $10 bill? And is there anything else that I should be doing to make sure that my credit is affected as little as possible?

Note: I realize I was dumb to let the bill sit for as long as I did, and I have no excuse. I won't do it again!

posted by cider to work & money (12 comments total)

I would send a certified letter to the collections agency stating something to the effect of:

"I am in receipt of your letter dated [enter date.] I mailed a check in the amount of $10 to [payee] on [date] and, accordingly, consider this matter settled.

"Pursuant to relevant state and federal law, I do not expect to hear from you again regarding this matter.

"Sincerely,

[Name]"
posted by dfriedman at 7:28 AM on November 10

It is very likely that the bill you owed to the doctor's office was automatically transfered to the collection agency, at a set number of days outstanding. The collection agency then generated an automatic letter to you. There may have been no humans involved.

The fact that this is now paid will probably resolve everything. It takes additional time and effort to report you to the credit bureau, so the agency will not do this for a while.
posted by Midnight Skulker at 7:30 AM on November 10

I've had this happen -- I once had a hospital turn my bill over to collections ten days from the bill date. No, not the due date. The bill date. (If I didn't have a conscience I'd use the blink tag there as well.) Never showed up on my credit report.

Neither, for the record, did the bill they sent to the same collections agency six months after they cashed my check.
posted by chesty_a_arthur at 7:34 AM on November 10

If you did pay this bill last week, then it's paid and you don't have to pay that original $10 again. If there is a late fee or penalty, you may be on the hook for that, but they should be clear in what they are asking you to pay.

"Would it would be better to call the original company and ask them if they received my check and whether they can call off the dogs?"

I would do this first to make sure they have your payment and that your account with them is current. Do not pay the collections agency. You are not the collections agency's customer, the original payee is. Once you know your account is clear with the original payee, ask them to ask the collections agency to stop contacting you. Sending a letter to the agency is a good idea, but only if you are sure that you have actually paid the bill.
posted by soelo at 7:36 AM on November 10

Long story, skip ahead to final paragraph if you're not interested: I once had a year-long cellphone contract with a company called Phones4U, who seemed to think I had a two year deal. I cancelled after one year, and they contacted me a couple of times saying "You're overdue on your payment," etc. I contacted them to say "I owe you nothing" and eventually they relented and all went quiet.

The only slight clue I had there was a problem was when I tried to arrange a mortgage a couple of years later, and it was turned down after it had initially been approved. But another bank was OK with it and loaned me the money. A couple of years down the line, I found out about the black mark placed against my credit history by Phones4U. I contacted them, and they refused to deal with me, even to allow me to pay off the debt (even though I didn't believe I owed them anything).

Anyway, point of the story: I contacted Experian and told them my tale of woe, and a very nice man mailed me back saying the bad credit was cleared from my record. Despite they look like big faceless monsters when you're caught up in their wheels, credit checking companies are concerned with accuracy and it is worth making your case to them if you feel you have a grievance or have been unfairly treated.
posted by BrokenEnglish at 7:45 AM on November 10

On re-reading, I'm not sure monsters have wheels.
posted by BrokenEnglish at 7:46 AM on November 10 [3 favorites has favorites]

chesty_a_arthur has a good point. Hospitals and doctor's offices often send accounts to collections, even if they have been paid or you have made arrangements to pay. It's ridiculous. It wouldn't be worth the time and effort for the collection agency to assign a $10 case to an acutal person. Check with your bank and make sure the check has cleared. If it has, don't worry about it.
posted by dortmunder at 7:47 AM on November 10

You are not the collections agency's customer, the original payee is.

I want to highlight this, because this is key. We're conditioned in this country to be very afraid of the word collections but you have a lot of power in this, especially since its a bill you have paid. From experience, I would not contact the agency or acknowledge them in any way. I would call the doctor's office, confirm they have received and processed the payment, then tell them you got a letter from ZZZ agency, and would they please inform the agency that the bill is paid in full. The Doctor's office should be happy to do this, since if you'd payed the agency rather than the office they would only have gotten a fraction of the amount that was due, whereas in this case they've gotten the full amount.

You'll be fine.
posted by anastasiav at 7:49 AM on November 10 [1 favorite has favorites]

You are in a very good position here and there is no reason to pay the bill twice. Call the original doc's office and work with them as anastasiav suggests. Ask for a statement or letter from the office acknowledging your full payment and stating that the collections will be closed. In a while, pull your annual credit report (you can do one from each bureau and get one free every 3 months for even more credity goodness). Should something have gone wrong, you can submit the letter, along with a copy of the canceled check, as part of a dispute to have any erroneous information removed from your report.
posted by zachlipton at 8:08 AM on November 10

Update:

I just called the original doctor's office, and they don't work with this particular collection agency, so it seems like this is a different bill. (I've been seeing lots of doctors lately for lots of different things, so I'm not as surprised as I should be that I got mixed up.)

I called the collection agency guy and asked him about the company listed on the bill, and he named a different doctor that I saw back in May. I don't remember receiving a bill for this, but it's entirely possible that I did and that it's gotten lost.

So, now that it seems that I haven't paid the bill, is the advice still the same? Should I still try to contact the original doctor, or shoud I just go ahead and pay the collections guy? He claims, FWIW, that it will not affect my credit score.

Thanks for all the advice so far, and I'm sorry that the situation is not as I originally described!
posted by cider at 8:16 AM on November 10

I think most of the advice still stands, as in you should pay the doctor directly if you can and then ask them to call off the agency. Also, you can tell them you don't think you got a bill.

Check with your bank and make sure the check has cleared. If it has, don't worry about it.
Uh, I would caution against assuming that if your records show it paid that the doctor's records do as well. Your account may not have been credited just because the check has cleared. And in this case, it was an entirely different account.

the collections guy ... claims, FWIW, that it will not affect my credit score.
I don't think he is really qualified to say what will or won't affect your score. Take steps to make sure this is not reported, but don't pay the agency any extra, just the original $10 (to the doctor if you can).
posted by soelo at 9:44 AM on November 10

I'm too lazy to look it up, but check out the FTC.gov website, and possibly your state's attorney general's site. Somewhere like that there is a listing of the Fair Credit Reporting rules, and the language you need to use when contacting the collections agency. Something along the lines of "[blah blah blah the dog ate my homework] and under no circumstances should you contact me again or report any negative information to any credit reporting agencies."

And I think there are different kinds of debts and collections that collections agencies do. And maybe it's based on time, I'm not sure. At the beginning, you are free to pay the original creditor and it goes away. But there is some point where the debt is actually transferred to the collector, and the original creditor won't have anything to do with you. If I wasn't so lazy, I'd look that up too.
posted by gjc at 4:18 PM on November 10