When You Have Unpaid Consumer Bills

When you do not pay your bills on time or are not able to do so, the creditor (the person who is owed money) can do several things to try to collect an unpaid bill. There are also things that the creditor cannot do to get payment. This is information about the laws that apply when people have unpaid consumer bills. (When we talk about consumer debts we mean only debts for personal and household items and services for you and your family).

What can you do if you believe that you do not owe the bill?

If you disagree with the amount the creditor says you owe, you should contact the creditor. Send copies of receipts, cancelled checks, and other proof of what you really owe. Keep copies of everything you mail. Writing "paid in full" on your check usually will not take care of the problem.

If you find out that the item you purchased is different from what you thought (for example, the item was used when you were told it was new), contact a law office for information about your responsibility for the bill.

If you are getting bills that you feel your spouse or former spouse should pay, contact a law office for information about your responsibility for the bill.

What can you do if you can't pay your bills?

If you know that your payment on your bill will be late, you should call or write the creditor and explain why. Creditors are sometimes more understanding if you let them know about your situation. But there is no law that says that creditors have to be understanding. When you purchase something and agree to pay a certain amount of money each month, the creditor does not have to let you make late payments or smaller payments later.

What can you do if you can't pay your medical bills?

Check to see if you have health insurance that covers the medical cost. If you do, be sure to submit the bills to your insurance company. Ask the hospital or clinic for any special programs or "charity care" they have for low-income patients. Try to get a copy of any application you fill out for charity care or other type of program.

If you are on welfare or Medicaid, you should tell this to the hospital or clinic when you get medical care. You should not be billed for the medical costs; a doctor or hospital cannot try to collect medical bills that are, or should be, paid by Medicaid. If you do not tell them that you are on welfare, you may still have the bill paid through Medicaid. You have to let welfare know about the bill within one year of getting the medical treatment.

If you have a divorce decree that orders your former spouse to pay medical bills for your children, you should try to have the hospital or doctor send the bill to your former spouse.

Hospitals and doctors sometimes charge interest on late bills. If you have a written agreement that you signed, they can charge the amount of interest that is stated in the agreement. Without a written agreement, you can only be charged a 9% interest rate on the late bill.

If you owe money to a hospital operated by the state, such as Oregon Health Sciences University Hospital, the state may keep your state tax and renter's refunds to pay the bill if you don't pay according to your agreement with them.

Do creditors ever agree to take smaller payments?

In most cases creditors do not have to accept smaller payments or late payments even if you have a very good reason for not paying or even if you need only a little time to catch up on your bills. Usually, creditors can require you to make the payments that you agreed to when you made the purchase. (If your loan is insured by FmHA, HUD, the VA, or is a government insured student loan, special rules may apply.)

Sometimes creditors will arrange a special payment plan that has smaller monthly payments. Before you agree to a new payment plan, make sure you can afford to make the payments. Any payment plan you have with the creditor should be in writing. The written plan should say that the creditor will not file a lawsuit against you as long as you are making those payments. Before signing any written contract, make sure that you know about all the payments and costs you are agreeing to. If the creditor won't give you a written contract, send the creditor a letter that lists all the things you both agree to. Keep a copy of the letter.

Where can you get help to pay your bills?

A consumer credit counseling agency may be able to get your creditors to accept smaller monthly payments. Most of these agencies will only be able to help you if you have a regular income that pays enough so you will have some money to pay bills after you meet your basic needs.

But be sure to investigate before you sign up for services with a credit counseling or debt management agency. Some of these agencies charge expensive fees for their services even though they claim to be non-profits. People who have signed up for help from one of these agencies can end up owing even more money.

Before you sign up for credit counseling or a debt management plan, you should find out what services the agency will provide, whether the agency will charge you for its services and how much it will cost. Read all written agreements carefully before you sign them. Do not be afraid to ask questions before you sign. Do not sign the agreement if you are not satisfied with how the agency answered your questions.

Sometimes you can borrow money to pay off bills. But loans with high interest rates and high monthly payments may not help you get out of debt for very long.

Be especially careful of short cash loans like payday and car title loans. Both of these kinds of loans usually have very high interest rates. If you renew ("roll over") a payday or car title loan, then the amount you owe will increase. It may be hard to pay off the bigger debt.

What will happen if you can't work things out with the creditor?

If you are not able to work out your dispute with the creditor or agree to a new payment plan, the creditor might turn your bill over to a collection agency; in some cases repossess (take back) the item you purchased; or take you to court.

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