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 booklet gives 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. Writing 'paid in
full' on your check usually will not take care of the problem.
If the creditor is a collection agency, see page 2 of this booklet.
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. (Other defenses are listed on page 6 of this booklet.)
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 on.
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 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. But 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.
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.
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 (see the next section) in some cases
repossess (take back) the item you purchased (see page 3); or take you
to court (see page 5 of this booklet).