Okay, I’m freaking out a little here.

I pulled my free Experian credit report this morning. Everything was pretty much normal - my bankruptcy in 2006, all the credit cards and loans from the bankruptcy that will come off in a few more years…. I’m just used to seeing a sea of negatives, unfortunately. (At least I do have a lot of “never late” stuff since the bankruptcy!)

But then I saw it.

A new “adverse account” I’ve never noticed before.

I nearly died.

The Problem

Apparently my insurance decided not to pay for a bunch of labs and tests I had done in 2009. This was around the time I got divorced, moved, and changed phone numbers, plus I stopped seeing the doctor who ordered the tests because he was too far from where I work. I’m assuming that’s why I now owe $800 to a collection agency yet have never received anything from them.

I despise medical bills. I’m also not a fan of my high-deductible insurance plan right now. It angers me that I was sent to collections when I would have willingly set up payments. But I guess it’s not the doctor’s fault I became unreachable, just like it’s not my fault I didn’t know I owed the money. Now I just have to figure out what to do about this.

Possible Solutions

My instinct is to take the money from my emergency fund and just pay the balance. The debt is nearly two years old, plus it’s dragging down my credit score, so I want to get rid of it as soon as I can. If I do that, though, I’d be down to around $500 in the e-fund, which totally deflates my excitement over all the money I’ve managed to save.

I could set up a payment plan [grumble]. I don’t really love that idea because I’ll pay interest, plus that’s just one more thing to pay every month. And if you’ve ever dealt with a collection agency, you know they stalk people, wanting higher and higher payments every month. I don’t like this option at all, though it may be something I have to consider.

Since the collection agency isn’t harassing me, I could spend the next month or two saving money specifically to pay the balance in full. This would keep me from draining 2/3 of my e-fund and I wouldn’t have to make monthly payments. The downside is that my credit report will retain the black mark until it’s paid. I’m not planning on applying for any form of credit, but you never know what could happen between now and then. Also, if someone from the collection agency ever gets my new address and phone number (which isn’t hard for them to do), they’ll drive me insane.

Finally, I could refuse to pay the debt. I’m not going to do this, because I know I owe the money, but I wanted to list all possibilities.

Time to Choose

I honestly don’t know what I should do. So that’s why I’m asking you guys.

Have you ever had an account in collections? How did you deal with it? What do you think I should do?