Debt can be something of a ghoul, haunting you at all turns, popping up when you least expect it. And like a ghost, debt has a way of hanging around long after you thought it was dead.
Debt from beyond the grave
Author Pamela Redmond Satran recently penned an article entitled, I Paid Off My Credit Card…and Then the Nightmare Began, which chronicles her experience fighting a negative mark on her credit report. The derogatory reporting stemmed from a credit card account she’d thought she’d paid in full – only to find out much later that she’d been charged for residual interest after the fact. That would have been fine, if not for the fact that the final statement went to the wrong address, the collection department called the wrong phone number, and all email correspondence went to someone else's email address.
So the debt wasn’t paid in full and Satran’s credit suffered as a result.
Of course, Satran argued that she would have been happy to pay the leftover interest, had she known about it. And eventually, after weeks of back and forth, they arrived at the conclusion that Satran should have updated her address and her telephone number, however, the creditor had her correct email address and couldn’t account for where the incorrect one had come from or why they had used it. Ultimately, the derogatory mark was removed.
While this is a unique case in some ways, it’s an important reminder of why you can’t afford to assume when it comes to debt and personal finance. Here are a few crucial things to keep in mind:
- If you’re about to pay off a debt, contact your creditor directly for a payoff amount. Simply paying the amount listed on your statement may not be sufficient to cover what’s owed, depending on when your billing cycle closes and how interest is being calculated. Go straight to the creditor to get an accurate payoff figure based on when you are planning to make the payment. Afterwards, verify that the payment was received and the account is paid in full. Hold on to your final statement verifying that the account is paid in full for at least a year.
- Monitor your credit and loan accounts monthly, even if everything is automatic. Don’t assume that someone else will catch account errors on your behalf. The sooner you notice incorrect charges or misplaced payments, the easier it will be for you to correct the error.
- Pull your credit report regularly and review the status of old accounts. This is especially important if you’ve previously settled on old debts. Some companies have been known to “resurrect” the unpaid portion of a settled debt and attempt to collect. Make sure you have a clear understanding and record of all account statuses.
- Read your mail. Don’t assume strange/unsolicited mail is a mistake or a form of direct marketing. If someone says you owe them money, review the letter and take steps to verify whether or not it’s accurate. Don’t ignore it.