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Published September 14, 2010, 07:05 AM

Q&A: Disputed expense can still hurt credit history

QUESTION:I have a disputed medical expense that I brought to the attorney general's office in my state. They confirmed they are investigating, and I advised the bill collection agency this was pending. Though the collection agency said they would wait, they didn't. There is an "adverse account" note in my credit report pertaining to this. What's my remedy?

By: Associated Press, INFORUM

QUESTION:I have a disputed medical expense that I brought to the attorney general's office in my state. They confirmed they are investigating, and I advised the bill collection agency this was pending. Though the collection agency said they would wait, they didn't. There is an "adverse account" note in my credit report pertaining to this. What's my remedy?

—V.I., Rochester, N.Y.

ANSWER: Unfortunately, drawn-out disputed bills often end this way — knocking about 100 points off credit scores. That can prevent you from getting a loan or can increase interest payments. It's one reason credit experts sometimes tell people to pay small bills before resolving disputes. But that's not an option if you are wrongly charged thousands, and you can lose your ability to get resolutions once you've paid.

If your credit report hadn't been dinged, you might have stopped the collection agency by telling them in writing that there was a dispute. Under the federal Fair Debt Collection Practices Act, a written notice, sent within 30 days of contact, is supposed to stop the collections process.

But now that your credit score has been dinged, you are in a more difficult position. Experian Vice President Maxine Sweet said you can file a formal dispute with credit reporting bureaus including Experian, but there's a catch. As long as your medical biller says you owe money, the bureaus won't take your side. Still, said Sweet, if you file a dispute, all lenders will see it, along with the delinquent bill, for the next seven years. If lenders pay attention to your note when you seek a loan, they might cut you a break.

Beverly Hills, Calif., attorney William Shernoff suggests you sue the institution billing you improperly, specifically requesting that your credit report be wiped clean. He also suggests demanding compensation for the damage your bad credit report caused. A consumer law attorney should take the case on a contingency basis (charging only if you win), he said.


ABOUT THE WRITER

Gail MarksJarvis is a personal finance columnist for the Chicago Tribune and author of "Saving for Retirement Without Living Like a Pauper or Winning the Lottery." Readers may send her e-mail at gmarksjarvis@tribune.com.


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