Collections letter, does that affect credit report??!! :(

[crunchy_mommy]

SOOOOO I'm very annoyed because I do all the bills & I have a 'system' for mail but DH sometimes gets to the mailbox first & his system is to throw everything in a huge pile (mostly the junk mail) and I just finally got through the pile today (it's probably been a couple months) and I found a collections letter!!!! It looked like junk mail which I'm sure is why DH didn't even open it.

It was for a bill I already paid (looks like I paid it around the same time the letter was sent) and I haven't noticed further mail from them (it dated back to Oct.) but now I am so paranoid that it hurt my credit report. I always always pay all bills on time and this one was only late (by maybe 1-2 months) because we were trying to negotiate with the hospital, and they had said we could set up a payment plan (although we ended up paying the full balance)...

What do I do?? I'm kind of shocked/devastated because I've never been in this situation & try to keep very on top of our finances & credit etc.

[HollyBearsMom]

Get a copy of your credit report. If it is there you can write letter explaining the circumstances and even challenge to have it removed  If this is your only time sent collection and your history is clean it should not be an issue.

However I do have to say that it *usually* take more than one late notice before they send you to collection. Did you not see any other bills/notices?

[FrugalGranolaMom]

There is a chance they may have reported the overdue bill on your credit report.

If you want to be sure you can check your credit reports. You are entitled to a free credit report every year. You can get yours from all three agencies at www.annualcreditreport.com

I wouldn't be extremely worried if it was just the one bill though.

[crunchy_mommy]

I've been meaning to get a copy of my credit report anyway, so I guess that's a good step to take. Should I also call both the hospital & collections agency to make sure they have me listed as paid in full... Would something like this show up on my credit report immediately or do I need to verify it again in a few months?

Originally Posted by HollyBearsMom 

However I do have to say that it *usually* take more than one late notice before they send you to collection. Did you not see any other bills/notices?

No, they never even sent me a late notice. They sent the original bill (which took me by surprise but that's a whole 'nother story) and then DH called them to discuss it and then they sent a follow-up bill which was identical to the first one, no due date and no 'overdue' notice, I thought it was just another bill confirming the amount since DH has discussed it with them. So we eventually paid it (I believe by the end of the month but it was awhile back so not sure on all the dates!) Then I find this letter from collections and I really wasn't expecting it. It looks like I paid the bill around or maybe even on the same day they sent it to collections which is really weird.
 

[HollyBearsMom]

That is crazy!

It wouldn't hurt to call and confirm before running it so that you know that they received payment.  Hopefully they did and you can just run your report once and be done.

[Nitenites]

Calling won't protect your rights. (Not to mention I can't tell you how many times I've gotten the wrong answer over the phone) You need written proof that this has been taken care of. Get a copy of your cancelled check, front & back (you may be able to print this from your bank's website), and send the creditor/hospital a letter, and enclose a copy of the cancelled check. The letter should state something like, "I received this letter from you dated xxx. Please note the cancelled check dated xxx payable to (Money Grubbing Hospital) enclosed with this correspondence. As you can see, the account in question has a zero balance. I look forward to your written response confirming that this amount has been paid in full. Sincerely, Me" 

Check your credit report, too. If it shows up there, write a letter and enclose a copy of your cancelled check. (And if you have the patience, wait to send your letter to the credit bureaus until you've received the response from the creditor/hospital, stating that the account has been paid. You can enclose a copy of that, too.) 

[cschick]

Was it a from a real collections company, or from the hospital's internal collections department/collections lawyer?

Many hospitals have a three-step process. First you get the bills, then the bills are forwarded to internal collections, then (once they've given up all hope of dealing with you) the bills are forwarded to an external collections agency. When I was dealing with the insurance mess surrounding the kid's birth, we had a couple thousand dollars worth of bills end up with the internal collections department. They are nothing more but a department focused on dealing with delinquent bills, and they did not report anything to the credit bureaus. It was only when the bills went to traditional (external) collections that it would have been reported.

As long as I was actively dealing with the hospital, they said that nothing would go to external collections. I had some bills with internal collections for almost nine months as they went through an insurance challenge, and they did not affect our credit rating at all.

[crunchy_mommy]

It was a separate collections company.

DH called the hospital today & they said that since we paid in full, it didn't really go to collections (and wasn't reported to the credit bureau). So how did I get a letter from collections? I'm so confused. I think I will call the collections company & make sure they show it as paid in full & then run a credit report.

ETA: I called the collections co. & they said it wasn't reported to the credit bureau. Phew.  I will still get a report just to make sure. Still confused but it sounds like I'm in the clear! :)

Edited by crunchy_mommy - 12/6/10 at 10:28am

[texmati]

And be careful if the 'collections' agency requests another payment! It may be something fishy going on (fraud).