How to Handle an Unexpected Bill


Having an emergency fund is a great way to handle surprise expenses, but what if the bill’s a mistake?

Let’s set the scene…

You’ve settled into your couch after a long day at work. You’ve turned on Dancing With The Stars and are pumped for an hour of watching Frankie Muniz try to tango. You’ve got that day’s mail on your lap—but you’re not worried. All your bills are up to date.

And then suddenly there it is: an unpaid bill from the hospital. What the heck? You get up and check your files. You’re sure that you paid that bill from your daughter’s gall bladder surgery…

In an instant, your quiet night of watching Terrell Owens go head-to-head with Barbara Corcoran on the glittering dance floor is ruined. Now you have to deal with this stupid bill that’s throwing your carefully planned finances into a tizzy.

Unexpected bills mean unexpected headaches

For many folks, handling major expenses like medical and car repair bills isn’t easy. According to a study from the Kaiser Family Foundation, 45 percent of Americans report that they would have trouble paying a surprise bill of only $500. That same study also found that, among people with incomes under $40,000, 35 percent don’t think they’d be able to pay that bill at all.

Paying off these kinds of surprise expenses is one reason that people turn to payday loans and title loans. These short-term no credit check loans come with extremely high interest rates—the Consumer Financial Protection Bureau (CFPB) estimates [PDF] an average APR of 339 percent for payday loans—which is why they can all too easy trap borrowers in a dangerous cycle of debt.

When it comes dealing with an unexpected bill, sketchy no credit check loans or pricy cash advances on your credit card are clearly not the answer. Taking one out could only dig you deeper in the financial hole.

Some unexpected bills are not to be trusted.

Before figuring out just how you’re going to pay off that surprise bill, you first need to determine that the bill is legitimate. In a world that is rife with hackers and con artists—where incidents like the Equifax Hack and post-hurricane scammers can happen within a month of each other—you can never be too careful.

Plus, it’s very well possible that a bill you’ve received was sent to you in error. (That’s the type of scenario we outlined in the opening section.) Lenders, debt collectors, hospitals, and utility companies are, after all, perfectly capable of making mistakes. Some even engage in shady, possibly illegal practices that deliberately mislead you as to what you owe.

it’s not as though all lenders, credit card companies, and utilities are  In some cases, a bill will be a flat out scam. In other cases, it will just be the result of a clerical error.

The two most common types of unexpected bills

Jim Wang () is a personal finance expert who shares his strategies for achieving financial independence on his blog, . In regards to bills that are fake or inaccurate, he says that the most common kinds are medical bills and debts that are in collections:

“Medical bills are notoriously hard to read, can often be coded incorrectly, and since they’re linked with something you know happened (some kind of treatment) it’s easy to fall into the trap of paying it.”

“As for collections, that’s a debt that was sold off and collection agencies can be very aggressive in how they try to recoup that money. Many times they can’t even prove they own the debt in the first place.”

How to handle a medical bill

For medical bills, you need to go through each line item and confirm it’s accurate,” says Wang. This will be hard because the coding may be strange but look for anything that looks incorrect (one treatment instead of another) and anything that’s added in but that you never received.”

“Confirm the dates of the treatment match the date on the line items on each bill. It’ll look scary but you need to go through and ask questions about anything you don’t recognize, medical billing fraud is huge.”

“If there’s something nefarious, I’d look into calling an attorney,” he says.

If you aren’t able to sort the situation out using only the bill itself, then Wang says that it’s time to start making calls:

“Get the provider (usually the hospital or utility) and have them explain what each item is and why it’s on the bill. If you need to, you can call your insurance provider for help if things are unclear. If you don’t get results you like, you can call your state’s department of insurance, they will have a fraud investigation team, and your state’s medical boards.”

“If calling the provider or your insurance company doesn’t resolve it, you need to get state and federal agencies involved. If it’s truly fake, it shouldn’t come to that but if it does, reach out to an attorney for help because they will know the ins and outs of navigating that situation within your state.”

How to handle a collections bill

If you have a bill that’s been sent to collections, there’s a good chance that the debt has been sold to a debt collection agency. This means that the original owner of the debt (a lender, hospital, utility company, etc.) sold the debt to this agency for a fraction of what you actually owed and wrote the rest of it off as a loss. That collection agency is now trying to recoup as much of the debt as they can from you.

There have been many instances where collections agencies have used incredibly aggressive tactics (also known as harassment) to recoup the debts that they own. And while some of these tactics are legal, some of them are most definitely not.

To learn more, see: What Debt Collectors Can and Can’t Do.

If you think a debt collector might be fake, the Federal Trade Commission (FTC) offers the following advice:

  • Ask them for their name, address, phone number, and company name.
  • Ask that they send you a “validation notice” in writing.
  • Send them a letter asking that they stop calling you as legit debt collectors legally have to do so—but only if you request it in writing.
  • Do not give them any personal information like your SSID, account numbers, etc.
  • Contact the original creditor to whom you owed the debt so that they can confirm its status.
  • Report the call to the FTC, the CFPB, or to your state’s Attorney General.

Above all, be prepared

If you receive a surprise bill in the mail, and it turns out to be legitimate, then you’re going to have to pay it.

The best way to prep for unexpected expenses is to build and maintain an emergency fund. Start with building up $1,000 dollars, then work your way up to a fund that covers six months worth of expenses. Eventually, you should have enough in savings to cover two years worth of costs.

To learn more about building an emergency fund—and other good financial practices—you should check out our recent blog post: 7 Bad Money Habits That Lead to Bad Credit.

Above all, you should avoid predatory bad credit loans like payday and title loans. If you absolutely have to turn to personal loans to handle your bill, you should probably stick to more affordable installment loans.

(And if you’re going to apply for an installment loan, might we suggest you apply for one from OppLoans? We’re awesome, we promise.)

Don’t let surprise bills knock off your game. Be thorough, be prepared, and you’ll be back to enjoying Dancing With the Stars before you know it.

Have you ever received a bill that you later learned was fake? We want to hear about it! You can email us or you can send us a tweet at @OppLoans.

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J_WangJim Wang shares his strategies for getting ahead financially and in life at Wallet Hacks (@WalletHacks). Jim has been writing about personal finance for over ten years and has been featured in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.


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