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Debt Collectors Don’t Check Debts, You Should

I blogged a while ago about the “halo effect [3]” and how being fiscally responsible can be a sort of “Get out of jail free” card for those rare occasion when you slip up. But what happens when it’s not you who has made the mistake?

I recently got entangled in a bit of an accounting snafu that quite frankly pretty much ruined my weekend. Here’s what happened:

On Saturday as I was heading out to the gym, I stopped by the mailbox to pick up my mail and found an envelope marked “Personal and Confidential.” In my experience, that’s usually a signal that the contents within are just some ad scheme–be it a credit card offer or time share scam or the dreaded “you’ve won a prize and must call xxx-xxx-xxxx immediately to claim it…” Upon opening the letter, however, I was confronted with a statement from a bill collector for an allegedly unpaid bill for a medical laboratory.

Yikes! Talk about a buzz kill…

Unfortunately, being that it was Saturday, there was no way to reach the billing department for the medical lab, my medical insurance company, the debt collector or anyone who could help me get the issue resolved. At first I was peeved because I thought the medical tests in question were from a February doctor’s visit and, although they’d been processed by my insurance company, the medical laboratory in question had never sent me an invoice for my portion of the bill. The nerve–sending me to collections for not paying a bill that had never been invoiced!

After doing some research, I couldn’t match up the so-called debt amount with any of the co-payment amounts listed by my health insurance for the most recent lab work. That’s when I started digging deeper into my old files and finally retrieved a bill from early 2008 that matched up with the amount on the collection letter. Well, that’s a relief–at least they weren’t sending me to collections over a debt that was a mere eight months old…

More digging turned up the credit card statement which proved I had PAID the invoice less than a month after it had been issued. Not only that, but given the notes I made on the statement, I had dealt with the billing department on the very same issue of the payment not getting posted and the debt remaining on my account years ago. Now, I’m steamed.

On Monday, I called the medical laboratory’s billing service. I explained that they sent me to a debt collection service for an invoice that I had paid TWO YEARS AGO. The person I spoke with requested I fax her proof of payment (in this case, my credit card statement) and said she’d take care of it. She later called to confirm that she had received the fax and that she was updating my account to reflect a zero balance and calling the debt collection service to notify them. She also said she’d send me a copy of my statement reflecting the zero balance–which I requested so the NEXT TIME they muck up my account, I have even more tangible proof of payment.

A week or so later the promised account statement had not arrived, but instead the invoice from services performed eight months ago. My first and only invoice for this particular lab work–marked “Final Notice” with a big orange sticker. Given that “Final Notice” is usually the step that precedes debt collection, I decided to check up on the “debt” that started this whole fiasco. I finally got a hold of the agent at the debt collection service and when he pulled up my account it still showed as “open.” I explained that I had paid the so-called debt two years ago and had a credit card statement as proof. He said no problem, just fax him the statement and he’d clear my account.

I then called the medical lab billing department to sound off about marking the first and only invoice sent to me as “Final Notice” as well as expressing my displeasure that they hadn’t cleared their mistake up with the debt collection service. I ended up talking with the same woman as before and she apologized for the “Final Notice” sticker, blaming it on the person who process the invoices. She insisted that she had called the debt collection agency, but would call again to make sure they expunged my record. I also paid off the most recent invoice while I had her on the phone and she called back five minutes later with a credit card confirmation number, an update on the collection agency (my record had not been cleared, but now was according to her and I would be receiving a letter from them to that effect) and a promise to send me a receipt for my most recent payment.

I still faxed the statement to the debt collection agent when I got to work. You can’t be too careful.

Going through all this drama has taught me a number of lessons which I will now share with you:

  1. If you receive a letter saying you owe money, do your research–don’t just assume it’s a fact. The debt collector is required to send you written verification of the debt, such as a copy of the bill for the amount owed.
  2. Keep good records. Now my record-keeping system isn’t the most organized, but I was able to find both the original invoice and the matching credit card statement which proved I had paid the so-called debt in a matter of fifteen minutes or so. This was a good thing because my credit card company wasn’t able to provide me with any back-up info more than two years after the fact.
  3. Know your rights. The FTC has specific debt collection guidelines [4] which outline your rights should you have an account sent to collections.
  4. Dot your i’s and cross your t’s. It’s a hassle, it’s annoying, it’s a waste of your time–but follow up and make sure that everything is verified and/or corrected. I made the payment on time initially, and when I got invoiced a second time for the same outstanding amount, I called and verified that I had made the payment–and I still got sent to collections. You can be sure that I won’t rest with this situation until I receive that confirmation letter from the debt collection service saying my account has been cleared. And when I do, I will file it away for the future.  Just in case.

Stella Louise is the editor of the Savings.com personal finance blog [5]. Blog & Save offers savvy consumers ideas and advice for living well on less.