Subject: Questions About Post-Cancellation Bills
I’ve been paying $436 a month for my 2022 Honda for a few years now, which has been difficult for me financially. Despite this, I’ve consistently made my payments on time using autopay and have never missed a bill. However, my last payment on February 28th led to an overdraft, and it was returned due to insufficient funds—something I’ve never experienced before.
After this incident, I switched from Liberty Mutual to Geico, which is now charging me only $159 a month. Geico then sent a cancellation notice to Liberty and requested a refund for the unused portion of my coverage for this month. My bill was due on the 28th, and the cancellation occurred around the 6th. I contacted Liberty to verify this, but they claimed they hadn’t received the letter and refused to provide a refund. Instead, they scheduled another attempt to withdraw the $436 from my account, adding an extra charge of around $90 without explaining what it was for.
Afterward, I went to my bank to stop autopay for Liberty since I technically still owe the $436. Unfortunately, they mistakenly halted all autopay transactions, meaning the $436 won’t be deducted, which wasn’t my intention. Now that I’m no longer a Liberty customer, their app won’t let me make that payment manually.
My question is: Are there any legal or credit implications for not paying bills after cancellation?
It sounds like you’re in a challenging situation. Here are a few points to consider regarding the potential legal and credit ramifications of unpaid bills post-cancellation:
Impact on Credit Score: If you don’t pay the $436 bill to Liberty Mutual, it could potentially impact your credit score if they report the unpaid debt to credit bureaus. However, this usually happens after a significant period of non-payment. It’s best to address any outstanding balance promptly to avoid negative marks on your credit report.
Collection Agency: If the bill remains unpaid for an extended period, Liberty Mutual might send the debt to a collection agency. This could lead to further complications and could also affect your credit.
Legal Ramifications: Not paying the bill could lead to a legal dispute. While it’s unclear how eager Liberty Mutual would be to pursue this, they could theoretically take you to small claims court to recover the owed amount.
Documentation of Communication: Keep records of all communication with both Liberty Mutual and Geico. If you can demonstrate that you canceled the policy and attempted to resolve the billing issue before it escalates, it might aid your case if it comes to disputing the charge.
Request a Payment Plan: Since you’re unable to pay the amount in full right now, consider reaching out to Liberty Mutual again. Explain your situation and see if they would be willing to set up a payment plan or offer a one-time settlement.
Consumer Protection: If you feel that Liberty Mutual is not being fair with their billing practices or the lack of communication regarding your cancellation, you might consider filing a complaint with your state’s insurance commissioner or a consumer protection agency.
Ultimately, it would be wise to resolve the situation as soon as possible, even if it means working out a payment plan, to minimize any potential negative impact on your finances or credit.