Woman Loses Her Home Over $6.30

It seems absurd someone would lose her home over a small unpaid bill, but that’s what happened to a Pennsylvania widow. Eileen Battisti’s home was sold in 2011 because she failed to pay a $6.30 tax, and last week, a judge turned down her request to reverse the sale, according to the Associated Press.

Battisti received ample notice of the coming tax auction, Beaver County Common Pleas Judge Gus Kwidis wrote in his ruling. Kwidis wrote there was “no doubt” Battisti received multiple notifications before the house was sold in September 2011 for $116,000.

Battisti still lives in the home, which is worth $280,000, and she said she plans to appeal the judge’s decision. Battisti said she didn’t know about the outstanding $6.30, as her husband managed the property tax paperwork before he died in 2004. Including other interest and fees, Battisti owed the county $235 at the time her house was sold.

Battisti’s experience is one of many consumer stories where small debts combust into massive financial problems. In this case, a woman is fighting to keep a major asset (her home), but sometimes the issue can be as small as an unpaid parking ticket. If the outstanding amount is sent to a debt collector and reported to credit bureaus, these pesky little bills can significantly hurt your credit.

This Pennsylvania property tax debacle is centered on whether or not Battisti knew about the bill: She says she didn’t but the judge said the mail notifications sent to her were never returned. If she happened to overlook the notices when sorting through piles of envelopes, she wouldn’t be the first person to suffer a big loss because she didn’t read her mail closely enough.

That’s the first takeaway from this story: Pay attention to what you get in the mail. The other thing to note is how small debts can have big consequences. If you receive a small fine or bill for an outstanding debt, you should probably pay it, as long as you’ve verified it’s legitimate. Should you end up with a collections account on your credit report (you can get free copies every year), you’re going to see your credit score drop, even if you’ve paid it, because most credit score models weigh paid and unpaid collections accounts equally (VantageScore 3.0 is an exception).

You can see how these little things impact your credit score by checking two of your scores for free with a Credit.com account. The good news is negative information has less of an impact on your credit score as it gets older, so one mistake won’t hurt you for too long.