I Missed a Bill — What Should I Do?
There it was: an envelope outlined in red with a return address, the telltale mark of a collection agency.
"That's weird," I thought. "We pay all of our bills on time. This must be a mistake."
I took a deep breath and opened the letter. It turned out that it had been sent on behalf of my family's former electric company. After I checked our account on the utility's website, I realized that it wasn't a mistake. We had an outstanding balance of a couple hundred dollars. It wasn't going to derail us, however.
My family had recently moved, and although we were having our mail forwarded, this was how we learned that some of it wasn't making it to our new house. We have all our recurring bills set up for automatic payments, but the power company didn't deduct our last payment. Instead, it sent a paper bill to our last address, and we never got it. It didn't send an email or call us. It didn't send a late notice. It sent our account to collections after 30 days.
The next month, we received another collection notice from a different utility company for only $40.
If you've ever PCSed, you know that feeling — the sinking realization that something important got lost in the shuffle of moving. No matter how careful you are, things can occasionally slip through the cracks. It's especially easy to lose track of bills. But, as I learned, Service members and their families have several legal protections against unfair billing practices. In addition, there are a number of steps you can take to resolve the situation, whether you're dealing with the original company or a debt collector.
- Ensure that it's your bill and that you actually owe the money. Don't click on any links or call any numbers if you unexpectedly receive an email, text or phone call. Instead, visit the company's website or call the billing department to verify the information. Legally, debt collectors have five days to provide validation information after contacting you — you should not provide any personal or financial details until you're sure you're dealing with a legitimate firm. In addition, it's a good idea to search your banking transactions in case there's been a clerical error and you're being charged a second time.
- If the bill was sent in error, find out how soon the charges can be reversed. If it has gone to collections, you have 30 days to mail a dispute letter. Consider sending it via certified mail and requesting a return receipt.
- If the bill is legitimate, ask for assistance if needed. A manager or a billing specialist may be willing to waive late fees or other penalties if you explain the situation, especially if you have a history of paying on time.
Find out what your payment options are. After a bill has been sent to collections, sometimes you can still pay it through the original company. (That's what I did.) Sometimes you have no choice but to deal with the collection agency. The Fair Debt Collection Practices Act (FDCPA) offers consumers a number of protections from abusive, unfair or deceptive practices from third-party debt collectors. For example:
- Debt collectors can't lie or threaten you with violence.
- They can't call more than seven times in seven days.
- They can't call you early in the morning or late at night.
- They can't contact you via email, text or social media if you tell them to stop.
- They can't call you at work.
- They can only discuss your debt with you, your spouse or your attorney.
Decide if you can afford to pay the full amount at one time. If you pay quickly and your credit is generally good, one late bill is unlikely to impact it significantly. In fact, a debt collection company cannot report the debt to a consumer reporting company until someone has spoken to you or sent you a validation notice and given you time to respond. My spouse and I paid as soon as we realized what happened both times, and never noticed more than small, temporary dips in our scores.
- If it's a large bill, perhaps you have an emergency fund or other savings you can use. If not, ask if you can set up a payment plan or consider applying for a low-interest loan from your Service's aid society. Remember that under the Military Lending Act(MLA), Service members and their spouses can't be charged more than 36% interest on most types of loans and credit cards. If you truly cannot pay, a settlement may be a last resort. However, keep in mind that settling a debt for less than you owe can impact your credit.
- Consult with a personal financial manager or counselor to ensure you understand the situation and your options. A military lawyer can also review the paperwork to ensure there are no hidden traps and your rights are protected. Reach out to your nearest installation and make an appointment with an expert who can help.
As you reach new milestones and complete your Service's financial readiness training, look to the DoD Office of Financial Readiness (FINRED) and your Service for trusted additional resources. You can follow @DoDFINRED on Facebook, Instagram,LinkedIn, X and YouTube, and download the free DoD financial education app, Sen$e, for financial tips on the go.