The Better Budgeting Podcast

How to Deal with Collections

• Danielle Reese • Season 3 • Episode 11

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Have you ever been blindsided by a mysterious bill that seems to come out of nowhere? It's a common nightmare, and I'm sharing my saga of chasing down unexpected charges from my son's medical procedure. From unearthing hidden physician fees to stressing over collection threats, this episode bares the chaotic world of medical billing. I share my firsthand account of facing off with billing departments, fighting off collection agencies, and learning how crucial it is to keep detailed records and demand transparency. This journey not only highlights the need for clear communication but also emphasizes the power of humor to navigate the stressful maze of financial obligations.

In a world where surprise medical bills can feel like a ticking time bomb, I'm revealing practical strategies to keep debt collectors at bay. Unearth the secrets of debt negotiation, learn how to wield the Fair Debt Collection Practices Act to your advantage, and discover why certified mail can be your best ally in documenting interactions. I spill the beans on the reality of scare tactics used by creditors and the importance of getting everything in writing. By sharing my story and practical advice, I aim to offer reassurance and empowerment for anyone wrestling with the complex web of debt and collections.

Danielle is a money coach helping women and couples who have been trying to figure out their finances FINALLY create a clear plan so they don’t have to worry about waiting to refill their bank account the next payday.

She is the founder of The Financial Freedom Society on Facebook and her signature money coaching program, The Better Budgeting Playbook. You can sign up for her newsletter by clicking here.

Take the first step towards financial freedom and sign up for a complimentary assessment call with me, Danielle Reese.


Grab your copy of "Let's Talk Groceries" Your Guide to Reducing Your Grocery Bill" This is an ebook with over 30 pages of tips, tricks, and guidance to help you save hundreds on your grocery bill!

Sign up for the early release of The Better Budgeting Blueprint for $99 with a $50 refund once completed. The release is scheduled for April 1st 2025.

You can connect with her on Facebook or Instagram.

Speaker 1:

Hello and welcome to the Better Budgeting Podcast. I'm your host, danielle Reese. I'm a money coach and the founder of the Better Budgeting Playbook, and this is my one-on-one coaching program for women and couples who have been trying to figure out their finances, finally create a clear plan so they don't have to worry about waiting on payday anymore. I became a money coach in 2020 after paying off over $60,000 in debt, rekindling my marriage, becoming financially free and wanting others to experience the same. If you'd like to work with me, you can check out the link in the show notes there. Also, we have the Financial Freedom Society on Facebook. It's a free Facebook community focusing on debt payoff, saving strategies, budgeting and money mindset. You can find the link to that community in the show notes as well. Oh, my goodness y'all. Oh, I am so glad that I am recording this podcast after I simmered down a little bit, but let me tell you about my experience with debt collections today. So back in April, my son had a medical procedure and prior to the medical procedure, they said hey, we need you to pay a thousand dollars and I was like I don't really want to pay a thousand dollars off my emergency fund for this thing. Can I pay you 400 and then you can send me a bill for the rest? One, I didn't want to pay it out of my emergency fund, but two, I wanted to make sure that my insurance was like doing the dang thing and making sure that they were covering what they were supposed to be covering before I just shelled out $1,000. And then five months later they send me a refund check or something. I didn't want that to happen, so I did that. I paid my $400. They sent me a bill for $600. It was actually like $597 and some change, but very close to $600. And I paid that off. Okay, after all, the insurance is done and stuff, I paid all of it off. I haven't heard anything from anybody since.

Speaker 1:

But then I got this text message the other day and it was from National Recovery Collection Agency and I was like, oh, this is spam, whatever. But I had my name, I had my address and it had like an amount of $220. And I was like that's really weird, but it's probably spam, so I'm going to ignore that. And then I got a letter in the mail from the medical place that my son had been going to for this procedure and it said that I owed $796. And I was like what? Because $796 was not ringing a bell for me at all. I was like this is really odd, why? So I tried to call them and that day that I tried to call them I was like the 10th in line and I just couldn't stand on the phone for that long. I had other things that I needed to do, so I hung up and I kind of forgot about it that day.

Speaker 1:

But then I got a text message again from this National Debt Recovery Service company and I was like this is odd, this is really odd. So I called the number from the paperwork that I got in the mail, because that seemed a little bit more legit to me, and I said hey, I have this letter stating that I owe this amount. But it's not a statement. It's telling me to apply for financial assistance and that I have a balance that's over 30 days old. Like what is this? And they said oh well, this is the physician's bill. What you paid was for the medical facility for you to use that.

Speaker 1:

And I said, I'm sorry, what? You guys don't come together and just bill me one, one big lump sum, like there's two, there's two bills what? And I'm laughing at about it now because this is just insane to me. Um, this is what? So the lady says, yeah, you, you are supposed to be getting bills. We sent out five over the last five months to your address. And I was like, no, you didn't. You did not because I do not have a bill from this place other than the medical center that I paid. Like, I don't have these bills. Oh, we send them out on this date, this date, this date, five times. And I was like, ma'am, I don't know where you've been sending these bills, but I have no idea what you are talking about. Like what? So she said, well, here's the deal you need to pay $1,067 today to avoid this going to collections. And I said what happened to $797? And she said, oh, there's a $220 balance and it just registered. Oh, they had sent that like the start of the collection process.

Speaker 1:

And I'm like, oh my gosh, in a world where people are now moving towards like email notification and online statements, y'all have been sending me statements for five months that have not been reaching my house and you want to send me to collections today, like what? And I had this moment of like, don't you know what I do for a living. Don't you know who? I am Like very selfishly and I did not say that to her because she's just trying to do her job. She was very kind and I was just, she probably heard it many times. Well, I didn't get it in the mail. And I'm like, no, genuinely, I did not get this in the mail. I would have known. I would have paid this dang bill a long time ago, a long time ago, minus the fact that I did not know that the procedure was going to be two grand, not just a thousand. A thousand dollars was for the facility, another thousand to use the doctor. How about that? Who would have known?

Speaker 1:

So I am on the phone with this lady and she helps me walk me through the online process of you know getting online and how to pay the bill. And I said, okay, well, where can I see the statements that y'all sent me? Oh well, they're not online. We have to mail them. And I said, lady, if you have not been able to connect with me and mail, do we think this is a smart idea to resend them in the mail? And she said, well, that's the only way we're gonna get it done. And I said go ahead and try. So I asked for an itemized bill just to make sure that my insurance was covering what it needs to cover, because I don't even know what this bill looks like now, other than a thousand dollars and 67 or 1067, oh my lordy. So I paid it yesterday, got it done out of the way and I'm really frustrated about it because one, I don't let bills do that.

Speaker 1:

The other thing is I certainly don't want anything going to collections Like what. I've never had anything go to collections. I might have forgotten a medical bill before about things, especially when my kids were super young, and you've got a lot of doctor's appointments like wellness visits and all this other stuff you know, and they're really sick and things. But I mean that was $50, $25. You mean to tell me that I didn't get a thousand dollar bill yet and you're going to send me to collections? Oh no, so I paid it. Shout out to the emergency fund. I've been hounding y'all for over a year now about getting an emergency fund in place. Get your finances in order.

Speaker 1:

So when these things happen, they're just a mild inconvenience that you can blab about and complain about on your podcast, okay, but I do have some just really helpful tips for you all about this, about collections, and that's kind of what I'm going to be focusing on today and that's. You know, my separate experience has gone ahead and influenced this podcast episode, so let's get into it. So, if a bill is in collections, it means that the original creditor has turned the unpaid debt over to a collection agency. I did not know this, but apparently there is like a time frame where you can pay the original creditor or you can pay the collection agency, because they're kind of like intermingling together until they're like, hey, you have your time to get your things together before I really move everything over. It's kind of like a quick little scare tactic, like thank God, they got a hold of me yesterday and we're like, hey, you need to pay this today, or it's going to be going to collections for sure, because I would have never even known. But there is that step and here's other things that I want you to do.

Speaker 1:

If something has already moved over into collections, here's a couple things that we want you to do. One is verify the debt. There is a law called the Fair Debt Collection Practices Act and that means that you have the right to request a debt validation letter from the collection agencies. The collection agency then has 30 days to contact you and say here is everything that's owed, here's your name on it, here are your rights. What I want you to do is I want you to make sure you're checking for accuracy. Make sure the debt belongs to you, the amount is correct, it hasn't already been paid or settled. That's validating the debt.

Speaker 1:

If that stuff is not correct, if that stuff doesn't match up to what the original bill was, we've got a problem. You've got to send it back and say listen, this is not, this ain't me right. Like you don't have this right. So you need to either wipe this or you need to correct it. I'm not, I'm not validating it because this isn't correct. If it is correct, if it is valid, all right, we're going to take ownership and we're going to negotiate with the collection agent. So that might mean that we're going to offer them a settlement If you can't pay the full amount.

Speaker 1:

Them a settlement. If you can't pay the full amount, let's say it's $1,000, $1,067, just to be about my situation If you can't pay the full amount, you may be able to negotiate a lower lump sum settlement. Just so you know, these collection agencies will buy debts from original creditors for pennies on the dollar. So, of my $1,000 collection well, almost collection they probably would have paid $200 for it, and what would have happened is that medical center would have just taken a write-off for $800, which is the difference, okay, so, before you pay anything anything oh, please, do not forget this step before you pay anything, I want you to get the settlement agreement in writing before you make a payment. Please, please, please, please, please, do this. It is so, so important. Okay, if you cannot offer a, get this in writing, all right, I want them to send a letter to your house that these are the stipulations, these are the terms, here's how much when it's due, all of it. Before you even make your very first payment, they have to send this in writing.

Speaker 1:

The other thing I want you to do is be best friends with them. Okay, they are not going to be nice, they're going to be jerks, they're going to be all the other things that I really want to say, but you got to be nice and you got to be best friends. You got to be in constant communication with them. If they're calling you nonstop, you got to pick up the phone. You have to. You got to say, hey, listen, I don't have it today, I don't have it today, I don't know when I'm going to have it. You continue to call. I'm going to give you an update whenever I can. If you have an update, guess what? You can call them and say listen, I've got an update, I'm ready to start this payment plan, I'm ready to settle, I'm ready to do whatever it is, because once it's collection, I can't really go anywhere else until it goes to court.

Speaker 1:

They might go ahead and sue you and say, hey, here's how much we're going to take you to court for and it's usually got to be a decent amount because of the court fees and everything. They don't want to have to pay all these court fees. And what's going to happen is you're going to go to court. You're going to go stand in front of the judge. The judge is going to say, hey, is this your debt? You're going to say, yeah, haven't. And he said, okay, well, what can you pay? Or here's my recommendation of how much you can pay, based on your income. And he's going to swing the gravel and you're going to have a payment plan. That's how it works. So to try to avoid that, we're going to be best friends with the collection agency and we're going to keep them updated and we're going to give them payments when we can afford to give them payments. We're not going to let them dictate our lives.

Speaker 1:

By the way, I must mention like you are not a bad person because things are in collections. You might not know how to manage your money properly and in a good way, but you are not a bad person. And people are going to come on the phone and they're going to be jerks to you and say things that could say like you're just a terrible person, I can't believe how this has happened to you and your kids don't deserve you Like. This stuff is real. People will say this to you at a collections agency trying to fear, mongrel you into paying, so they'll stop calling. But I'm telling you you got to be strong. You got to say this is, this isn't right. I will tell you when I have money, I will call you. You can continue to call me. I'm going to tell you the same thing and that kind of leads into.

Speaker 1:

My next point is understanding your rights. The Fair Debt Collection Practices Act, it's FDCPA, says that collection agencies cannot harass, threaten or mislead you. They have to provide accurate information and they can't be calling you at work and harassing you at work. There's certain times that they can only call you. So get comfortable with that act, especially if you have many collections, because if they start crossing the line, we've got a lawsuit here that you are definitely going to win. I can't say definitely, because there is no definite right, but more than likely going to win because they're breaking the law. There's another thing that I want to mention, and that is your statute of limitations. Each state has their own statute of limitations for debt collection. This typically ranges between three and six years, so after this period, a debt collection agency can't sue you any longer. They can still try to collect the debt, but they can't take you to court for it.

Speaker 1:

I have a client that, interestingly, they're starting to get their finances in order. We've actually paid, I think, one or two collections together and they get this call from a debt collection agency that was from 2002, I think, so it was 22 years old. They're still calling them, trying to collect this debt and I'm like, oh my, they're really persistent, aren't they? So definitely know the Fair Debt Collection Practices Act. It's so important, especially if you are in collections. If you get it paid off, awesome, I'm excited, I'm happy for you.

Speaker 1:

You really want to monitor your credit report and you want to make sure that they mark that collection as either settled or paid. You don't want that to go on as unpaid or a charge off or anything of that. We want it to say hey, this has been paid. I want a good mark, even though it's a collection, on my credit report. I want a good mark saying that I actually paid it and I settled it.

Speaker 1:

And then, lastly, is you can dispute stuff. If you feel like, hey, this is not me, this is not my debt, this is not accurate, you can dispute that through the credit bureau. So, experian, transusion, equifax, all of those you can go ahead. They typically have like a button now on their website that you can dispute very easily. But you also want to send a letter to the collection agency.

Speaker 1:

Anytime that you are having conversation with collection agency, you want to make sure you're writing that down, especially if you're sending letters. It's really awesome to send certified mail. Yes, you have to pay for it, but you want to make sure that they sign for that letter, that they receive that letter so they can't say, hey, we didn't receive your letter. You want documentation for absolutely everything through this process. Okay, I hope this episode was super helpful for you. I hope you had a little laugh with my experience of how frustrating that was for me. I guess that's my coping mechanism. It's just like laugh through it, because what else can you do? Right, like it is what it is, all right. Thanks so much for listening to this week's episode and I'll chat with you soon. Take care.