You know where the money goes each month, and one of the things you can count on is continuing debt, such as a bank loan for a new home, a new car, or even college tuition.
This isn’t necessarily bad since this is often the only way most people can afford the big-ticket items, and you know how much and how long the payments will be.
But some debts can blindside you. Let’s review some examples of unexpected expenses and how to address them, especially when dealing with old debt.
Common Unexpected Expenses That Carry Hidden Debt
Here are examples of expenses you’re likely to incur unexpectedly:
Medical Bills
Even if you have insurance, you probably don’t know precisely what that will cover, and you may find yourself on the hook for some out-of-network charges. But the good news is, you can ask FAIR Health, a national non-profit group that advocates for lower costs. You can also talk to your hospital’s billing office and negotiate a payment plan or possibly even financial assistance, but don’t put it off. Doing so can lead to higher medical bills due to late fees and damage your credit score.
Car Repairs
Another example of unexpected expenses is car repair charges. If you drive a car, you’ll have car trouble at some point; sometimes, that trouble can come in the form of a costly repair bill. You can take early steps to keep the cost down by having regular preventive maintenance done on your car, but if you do have to have repairs, shop around for a trustworthy garage before you commit. Some garages have undisclosed fees, and you may carry some hidden debt that may spring up later. You may want to check the garage’s online ratings or even ask some friends for recommendations.
Automating Bills Payments
For all the convenience of autopay that lets you set it up to debit your account to pay your recurring bills on the same day every month, things can go wrong. You may end up with a returned payment or a late fee when the payment does not go through, or you haven’t correctly enrolled. You may not be making your monthly payment and not even realize it until you’ve run up some hefty late fees. These are examples of unexpected expenses that many on autopay people are having to pay.
It’s always a good idea to check your autopay occasionally for any hidden debt. You may also decide to do away with autopay and set up an auto reminder with your bank in the form of emails that warn you when the payment date of any bill is approaching.
Zombie Debt
Although zombie debt sounds like it should be a really good, scary movie, it’s unfortunately a terrifying thing and one of the examples of unexpected expenses that come upon many people. Zombie debt returns from the dead to take a bite of your wallet (and possibly your credit score). It’s a dormant debt resurrected by a bill collector or even by you making a payment on your old debt. Creditors often remove old debts from their books and sell them to debt collectors for pennies on the dollar. Even if they only collect a portion of what you owe, it’s still a profit for them.
There are several sources for zombie debt, such as debts you’d forgotten and debts that you’d already settled with your creditor — perhaps they agreed to a lesser sum if you paid it off in one or two payments instead of a period of months or even years — charges from identity theft, debts wiped out by bankruptcy, or debts that have already passed the statute of limitations.
What Do You Do About Old Debts That Come Up?
The problem is, it’s hard to tell when an old hidden debt is legitimate because the information tends to get muddy as debts are sold and resold and high-pressure collection tactics are brought into play. But what do you do when faced with these examples of unexpected expenses from the past whose details you cannot recall?
There are ways to fight it, and the first thing you’ll want to do is gather as much information as possible before you make a decision. That means no matter how much pressure a collector puts on you during a phone call, don’t agree to anything. Instead, insist upon a validation letter that outlines the original amount, the original creditor, and how to challenge it. This will also help confirm whether the original debt has already been paid off or is past the statute of limitations (that doesn’t mean a debt collector still won’t try).
Once you have the information and you see you have paid off the debt, write a letter to the collection agency demanding they cease contact. The Fair Debt Collections Practices Act requires them to do so.
If it’s not your debt, write a letter stating that within the first 30 days of contact. If it is your debt and you can pay, do it. Set up a payment plan and get it over with. This can bump your credit score once it’s all behind you. But whatever you do, get everything in writing.
Get A Loan To Pay Off That Debt
Don’t shy away from getting help to clear that pressing debt if you run into any of the examples of unexpected expenses above. Debt collectors’ high-pressure tactics can be pretty upsetting, spoiling your day and disrupting your life significantly. It’s best to get a loan, pay off the urgent debt, and repay the new loan comfortably over an extended period.
Get your loan from the best lender, Minute Loan Center. The application is quick, loans are processed fast, and you may get your funds on the same day. Apply for a loan here or contact us for help or more information about our loans.
Kevin brings over 15 years of experience in marketing, with a specialized expertise in growing online businesses. As the Director of Marketing at a leading FINtech company, he employs innovative strategies to enhance brand visibility and customer engagement. Kevin’s passion lies at the intersection of technology and finance, where he pioneers solutions that not only meet but exceed consumer expectations. His commitment to leveraging his expertise ensures impactful results and the building of lasting relationships in the digital landscape.
