Credit Basics

If opening up your mail and finding a bill is a slap in the face, getting a bill for something you never bought or for which you've already paid is a full-force sock in the jaw.

Whether it's because of an error or fraud, if the charge isn't addressed, it can affect your ability to get loans to purchase things like a car or a home.   "You immediately have to call the source," said Erika Safran, a financial planner with Financial Asset Management in Manhattan. "If you do not owe the money, it is your responsibility, your duty and your right to bring it to the attention of the collection agency and the credit agency that's asking for money."

The worst thing you can do, whether or not you owe the money, is to ignore a bill from any creditor, retailer, service provider or collections agency, said city Department of Consumer Affairs (DCA) Acting Commissioner Jonathan Mintz. "Act very quickly," he said, adding that consumers have 30 days to dispute a claim by a debt collection agency in order to preserve all their rights.

Most importantly, put your beef in writing, Mintz said. The DCA suggests that you include this statement: "This is a request to cease all further communication in regard to this matter. Your account of my alleged debt is inaccurate. Any further communication beyond what is legally allowed will be a violation of the law."

You should also ask that they provide you with a copy of the original bill. Keep a copy of your letter (and any related correspondence), and send the letter by certified mail.  Once they have received this letter, debt collectors are only allowed to contact you once more by law, and under no circumstance are they allowed to harass or intimidate you, Mintz said.

After they have provided a printed bill or invoice that proves that the charge is yours, though, they are allowed to mark your account as delinquent on your credit report. If that happens, you can respond by putting a comment on your credit report yourself of up to 100 words that notes that certain charges are in dispute.

If the company or credit agency reports the debt as delinquent, you can contact the New York Department of Consumer Affairs at 311 and ask for help in resolving the complaint.  If the company sues, the DCA says you should consult an attorney. If you can't afford one, you should answer the court summons yourself, because if you're not there to dispute the charge a creditor can get a default judgment. That could include additional fees and interest charges and could even allow your wages to be seized to pay back the debt.

While creditors and retailers sometimes make billing mistakes, unexpected bills or charges can be a red flag for identity theft, said Howard Dvorkin, a financial counselor at Consolidated Credit Counseling Service.

You are legally liable only up to $50 for unauthorized charges on a credit card, if you can prove that they are fraudulent, experts said. After you've dealt with the initial problem by contacting the creditor directly, get a copy of your credit report, which you can get for free each year.

The report should list all debts and credit accounts in your name, so look out for anything you did not apply for yourself.  If you find any suspect accounts, you can contact any of the three main credit reporting agencies (Equifax, Experian and TransUnion) and ask them to put a 90-day "fraud alert" on your credit report.

The alert lets potential creditors know that they should take extra steps to ensure that the person applying for credit is actually you.