I Want to Pay an Overdue Bill. Where Do I Begin?

Missing a bill payment can have all sorts of nasty consequences — late fees, debt collector calls and credit score damage, to name a few. No one wants to deal with any of that, and the sooner you address the debt, the sooner you’re likely to get rid of those problems.

But paying an overdue bill or debt collector can be intimidating, not to mention confusing. Here’s how to get a handle on the situation so you can make good on your obligations.

1. Figure Out What You’re Dealing With

Perhaps you got some mail or a phone call informing you that you’re behind on a bill. Before you start paying people, do a little research.

“We see consumers mistakenly come to the conclusion that they haven’t paid when they have,” said Randy Padawer, consumer education specialist for Credit.com partner, Lexington Law firm. “First, gather up all of the relevant paperwork and make sure that that is indeed the case.”

Check your account status by reviewing statements, and compare that with the information on your credit report. Know that a delinquent account is different than a collection account, but either way, Padawer said, the best place to start is with the original creditor.

2. Take Control of Communication

Start by calling the customer service department of whatever company you owe, say you want to pay them and find out the process for doing that, Padawer said. Maintain detailed records of your communication and payments. If you have an active account with that company, making the payment should bring you back to current status, but if the debt has been sent to a third-party debt collector, things can be a little more complicated.

“There are situations when original creditors won’t accept payments after things have been charged off,” Padawer said, but if you can arrange to pay the original creditor, you may be able to more easily resolve the issues with any related debt collectors. “They should and often will pull back the alleged debt from the collection agencies. That allows the consumer then to more easily dispute those subsequent collections right off of the credit report.”

Getting the collection account off your credit report won’t erase the late payment marks from when you first fell behind, but those will have less of an impact on your credit score over time.

3. Know Your Rights

Consumers have a lot of control when dealing with a debt collector. Whenever you first receive communication from a collector, you’re entitled to have them confirm in writing that you owe the debt, that they own the debt and that they are licensed to collect in your state. You can also dictate the way they communicate with you, ideally in a way that allows you to keep good records.

Take your time to make sure you’re properly addressing the problem, Padawer said. Most credit scoring models weigh paid and unpaid collection accounts the same (medical debt is an exception in some credit scoring models), so rushing to pay the debt won’t likely help your scores. Familiarize yourself with your debt collection rights so you can confidently reach a solution.

“You’re going to want to find out if the collection agency is willing to settle,” Padawer said. “Consumers should remember that [debt collectors] buy these debts for pennies on the dollar and they’re happy to collect a fraction on what they buy, but the problem is they are in business to maximize the take, so you may have to drive a bargain.”

That negotiation could include asking the collector to remove the account from your credit reports after you pay (they may not do it, but you’re allowed to ask), as well as paying less than what they’re trying to collect, which sometimes includes added fees and interest.

“I would be deliberate and take your time when negotiating with a debt collector,” Padawer said. “Don’t be rushed, especially when you don’t recognize either the company or the balance. Be willing to hang up without a deal and be willing to again commit all of the communication to writing.”

4. Make the Payment

Once you’re ready to pay, whether it’s with an active account or a debt collector, document your payment as well as you can. Write the account number on the check you use for payment, and save payment receipts. If you’re paying the original creditor, send proof of payment to debt collectors as part of your effort to remove those accounts from your credit reports.

“At the end of the day, if you have an obligation sent out for collections, fair or not, you’ve got your work cut out for you,” Padawer said. “It can be frustrating, but because credit reports and credit scores impact so much in a consumer’s life, you really owe it to yourself to handle these things with knowledge and strength.”

As you deal with resolving late payments and collection accounts, keep track of how they’re affecting your credit. You can see the impact of overdue accounts by checking your credit scores for free on Credit.com.