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I have a very small bill amounting to $43. I was billed this amount when a medical services company sent me a product that I did not order. (It was probably ordered on my behalf by a doctor I visited.) Perhaps erroneously, I ignored it and they sent the bill amount to a collections agency.

At this point, the collections agency is asking for $55. The doctor at fault is actually really good and they have gone out of their way for me in the past. I am trying to get their opinion on this matter.

I am tempted to just pay off the debt because this might get worse before it gets better. On the other hand, I didn't order the product. In any event the money won't break the bank or anything, I am just looking for someone to either say "you're a dink, pay it" or "stick up for yourself and do (this)".

Is there a downside to paying off the debt? In general, what is the credit score hit for an unpaid $55 bill?

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  • Do you still have the product? Can you just send it back? Have you talked to the medical services company about this? – DJClayworth Dec 18 '13 at 19:43
  • @DJClayworth: as i said before, i ignored the entire thing and was a dink for doing so. – horace Dec 19 '13 at 13:29
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Collections companies buy debt for a fraction of the face value of the debt (as little as 5-7 cents on the dollar), and you can often settle debt for a fraction of the face amount (perhaps 10-25 cents on the dollar).

But there are several considerations. Do you owe the debt (is it a legitimate debt), can you afford to pay the debt, what is the age of the debt (remember, there is a statute of limitations on debt, varies by state), and what are the consequences of non-payment or settlement of the debt.

Rather than confirm that you owe the debt, tell the debt collector that you need proof that the debt is yours (you should do this by certified letter). Be careful not to confirm the debt, or agree to pay it, or make any payments (yet).

You said that your doctor ordered the product for you.

You said the company sent you a product (you have the product).

Once you have confirmed that the debt is yours, you should determine the age of the debt (when was the last time you paid on the debt). Each state has statute of limitations on debt, depending upon the age of the debt (this is why it is important not to send the collector money until you have verified the debt).

You did not state when the debt was incurred (assume under SoL).

Ask yourself whether you can afford to pay the debt. The amount of the debt, and your ability to pay, and whether you want to avoid the time and expense of dealing with the collector (they are trained to be annoying) are all factors to consider. You should also consider the negative consequences (credit score effects), and whether the cost of a derogatory entry is worth fighting the debt.

You did not explain your financial situation; paying the $55 may be trivial, or it may be a hardship.

Before you settle any debt, you should send a letter (keep a copy and proof you sent it, certified), and demand that the debt collector provide proof that you owe the debt. Often this proof does not exist, or is insufficient to gain a judgement (you would need legal help here). And should a debt collector agree to settle the debt for a lower amount, you need to get that agreement in writing. Be aware that when you settle a debt, the collector can (and will) send you a 1099 for the portion of the debt which has been forgiven, and can report to the credit bureaus that you settled a debt for less than the full amount (negative mark against credit). Derogatory credit items will haunt you for years.

Decide whether saving $20, $30 or even $55 is worth the trouble. Probably not.

Learn from this.

When a company sends you something you did not order, contact them, and send it back or demand they pay shipping, and send them a letter demanding $5/day storage and $20 handling fee to ship it back to them.

Disclaimer: Heed the insane ravings of a deranged heretic at your peril... hire a lawyer.

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  • thank you for this information. i appreciate your thoughtful input. – horace Dec 19 '13 at 13:30
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    also: very cool idea about the storage/return shipping. it has been added to my arsenal. wish i could send you the $55 instead. – horace Dec 19 '13 at 14:18
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    I deleted my answer; This was much better. I did suggest contacting the original company and seeing if they can pull it back from the collector in exchange for settling up completely and clearing the report. @horace – MrChrister Dec 19 '13 at 14:58
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To me this is a simple cost/benefit analysis... I'm guessing you will spend a whole lot more time and effort trying to fight the collection agency than the $55 is worth. In this case I would just go ahead, pay it and be done with it. Had the amount been higher, this would change. But that's me; you should do your own analysis based on your circumstances (including how much it's worth to you to be right) and let that inform your decision.

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  • A good analysis. If you do decide to pay, get it in writing from the collections agency and the medical svcs company that you paid. – Steven Dec 18 '13 at 20:28
  • What about the opportunity cost of a lower credit score? – MrChrister Dec 18 '13 at 21:21
  • @MrChrister good question. I don't know enough about the effect this would have (in terms of severity and duration of effect) - that is if the debt made it on the report already. Definitively another variable to consider. – Korneel Bouman Dec 18 '13 at 21:29
  • @KorneelBouman: i am beginning to think that you are most likely right for my situation. this is just $55 and the time/effort to make this go away is going to be hard to justify. if it were $555, that would be another matter. – horace Dec 19 '13 at 13:31
  • @Steven: how do i 1) pay off the debt and 2) ensure these parties will send me this letter? what kind of a knock will $55 unpaid give my credit score? – horace Dec 19 '13 at 13:32
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According to https://www.consumer.ftc.gov/articles/0181-unordered-merchandise, If you didn't order the merchandise, then you don't have to pay for it. I would talk to your doctor about this order and clear it up. I would only suggest paying for the product if you feel it will hurt your relationship with your doctor if you don't pay for it.

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Due to the fact that months have gone by since the item was shipped to you it will be hard to resolve by sending it back.

The collection agency is now only interested in getting as much of the money as they can from you. They may have sent a percentage of the debt to the original company when they bought the debt. They may also be working on a commission. Therefore they are not interested in having everybody happy with the result. They need to follow the law, but they don't care if you are a happy customer.

The longer you wait to resolve it, the longer it will remain on the credit report. The fact that it went to collections has already hurt your score.

Yes, make sure that they update your credit file to reflect that you have paid the debt. Get it in writing.

Also check with your health insurance company to see if this is at least partially covered by insurance. They generally won't cover the $12 in fees from the collections company, but they might cover part of the original bill. Depending on the item, it might also be an allowable expense for your FSA (Flexible spending account) or your HSA (Health Spending account).

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  • sending it back will probably not be an issue. they already sent in a claim for the bulk of the item and $43 was the original copay. the insurance company is probably gonna just tell me i'm a dink anyways. – horace Dec 19 '13 at 13:33
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    correction will probably not be possible. ["an issue" implies it will easily be done] – horace Dec 19 '13 at 17:49

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