Damaged Credit, No Bill: What You Can Do

When it comes to getting a bill, no news isn’t always good news. While most of us would prefer to get fewer bills, not getting one for something you do indeed owe can be costly.

It can also be very damaging to your credit. One woman, for example, sent a heartfelt plea to her credit card company after she overlooked a $17 bill after the birth of her second child. She said the resulting late payments listed on her credit reports cost her thousands of dollars on her mortgage (due to the higher interest rate she had to pay because of her lower credit scores.) She’s not exaggerating: the average lifetime cost of debt for a typical person with excellent credit versus someone with bad credit can easily run into six figures.)

What can you do, and what should you do, if you are being hounded for payment but you never got a bill?

Credit Card Bills

Under the Truth in Lending Act, the failure of a card issuer to send a bill is considered a “billing error.” Here’s the exact definition of this type of error:

The creditor’s failure to mail or deliver a periodic statement to the consumer’s last known address if that address was received by the creditor, in writing, at least 20 days before the end of the billing cycle for which the statement was required.

But here’s the irony. You have to know you didn’t get a bill — and let your issuer know that — fairly quickly in order to protect yourself. Under the Fair Credit Billing Act, you must properly file a “billing error notice” with the issuer. That means sending the card issuer a letter to the address noted on the statement for billing errors and inquiries. The letter must contain enough information that the creditor can identify the consumer’s name and account number, and an explanation of why you believe the error occurred. (In other words, list the statement you didn’t receive.) And this notice must be sent to the creditor within 60 days from the time the statement should have been mailed.

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Of course, if you overlooked a bill, how likely is it that you will catch it in time to write to the creditor? Needless to say, it’s doubtful most consumers take advantage of their rights in this way.

Protect Yourself

The fallout from damage to your credit from a missing bill can be significant, so try to protect yourself from this kind of mishap.

Set up alerts. Most issuers allow you to set up text message and/or email alerts to tell you when a statement is read and/or a payment is due. But don’t rely on those alone. Your budgeting software or even a note on your calendar can remind you to check your statement and make sure any balance due gets paid.

Watch for that first bill. If you open a new account, mark your calendar 30 days out with a reminder to check for a bill. If it doesn’t arrive, immediately contact the issuer. If you do that by phone, follow up in writing. Among other things, card issuers are required to provide consumers with an initial disclosure, including a statement of billing rights, when they open an account. If that never arrived, or a statement was not sent (provided there was a balance or any account activity) and the issuer refuses to resolve the problem, you may need to file a complaint with the Consumer Financial Protection Bureau or talk with a consumer law attorney.

Monitor your credit. Whether you get your credit scores for free each month (you can get your scores for free every 30 days on Credit.com) or use a credit monitoring service to keep an eye on your credit reports and scores, a large change in your score or new late payment can indicate a bill went unpaid. If you act quickly, you can assert a billing error to protect your credit.

Medical Bills

A reader shared this experience on the Credit.com blog: “I received the first bill ever from a pathology service for surgery I had 4 years ago. I have never received a bill until today. My insurance has changed 4 times since then. Can clinics/hospitals/etc bill you this late after service?”

Medical bills can be especially tricky to navigate. For one thing, you may leave the ER, clinic or even a doctor’s office unsure about who will be billing you. So it can be impossible to know what bills to look out for. (If fact, this reader’s comment is just one of dozens we have received from patients who first heard about an unpaid medical bill long after the fact, and usually after the balance had been turned over to collections.)

The first step is to contact the provider to find out why you haven’t received a bill before. Confirm whether they have your correct address on file. Keep written notes from the conversation, or even consider putting your request in writing via certified mail.

If it turns out you were never billed and the provider was a participating provider in your insurance plan network, contact your insurance company to find out whether their rules prohibit the provider from billing you because they failed to bill insurance in a timely manner. If you are responsible for the balance but the provider never sent you a bill, try asking them to pull the account back from collections so you can pay them directly. (Paying a collection account doesn’t usually improve your credit scores.)

Going forward, be proactive about hunting down medical bills and making sure they get paid:

Ask lots of questions when you receive medical services. Who will be treating me? Are they a participating provider in my insurance? How can I contact them if I don’t get a bill?
Look for the “Explanations of Benefits” from your insurer for all services; if you don’t get them, or if the EOB says you are responsible for part of the bill, contact the provider for clarification or to pay the balance you owe.
Keep good written records of any bills and correspondence.

If, despite all these efforts, you hear from a collection agency, you have the right to request validation of the debt from the collector. Do so in writing right away. Also, check your credit reports (here’s how to get your free annual credit reports) and if the bill appears as a collection account or a negative item on your reports, dispute it. If you can’t get it resolved, consider filing a complaint with the Consumer Financial Protection Bureau which has been looking into the problem of medical debt on credit reports.

Fraud

Another reader asked us this question:

“Someone made a purchase on my … financial account and they had proof that I didn’t do it. They never notified me about my delinquency and I never received a bill and I don’t know who the collection agency is with this account and they report negative information to the credit bureau. What do I do?”

There is no time limit for disputing fraudulent charges or accounts. The sooner you catch them and challenge them, the easier it will be to straighten out the problem, but if you get a bill that doesn’t mean you’re out of luck.

If you discover the problem because you are notified of the debt by a collection agency, you can request verification of the debt. Do so in writing right away.

If it turns out the fraud was due to identity theft — such as a new account opened in your name by someone else — most companies are not going to take your claim seriously unless you have a police report. So try to get one, even if the crime happened a while ago. Also fill out a fraud affidavit, which you can get from the FTC. Send it to the company that has contacted you about the debt, along with the copy of the police report. Send this information by certified mail, return receipt requested and keep a copy for your records.

If the fraudulent charge was due to someone using your credit card number without your knowledge or authorization, dispute it in writing by sending a certified letter to the address on the statement for billing errors and inquiries. Send your letter by certified mail.