Can a Company Send a Bill to Collections Even if I Successfully Disputed the Charge?

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Being able to dispute a charge is a key component of using a credit card.

It’s comforting to know that if a company charges you for something it shouldn’t have, just because it has your credit card number, you can do something about it.

But what happens when you successfully dispute a charge and the company sends the bill to collections anyway? A podcast listener recently asked that question of money expert Clark Howard.

A rental car company billed the person for extra insurance that the individual never authorized. The credit card company determined that the customer did not need to pay.

“But the rental car company kept billing me and eventually banned me from renting from them and turned the bill over to a bill collector who is now hounding me for payment,” the listener said.

“I don’t care about getting banned, but I’m concerned that the outstanding bill will hurt my credit rating and I don’t want bill collectors bugging me. What more can I do?”

This is a justifiable concern. Ignoring a bill collector is a risk. Even though the listener has done nothing wrong, it’s possible this could turn into a negative item on the listener’s credit score. Negative events like an unpaid bill stay on your credit report for seven years.

Clark Howard’s Solution

“In your case, you need to, in writing, by certified mail, notify the collection agency that you dispute the validity of the debt. And once you’ve done that, it puts you on a different plane than if you’re just talking to them,” Clark says. “Because what you have to do is go back to the core of it and say that the debt itself is not valid.”

You can also sue the car rental company in small claims court. You’ll need to find the registered agent for the company in your state and serve that individual. The general counsel of the company may not want to hire a lawyer to come and defend the company in small claims court.

And if they do show up to court, you have documentation in the form of your certified mail and successfully disputed charge.


You’ll have to pay a small amount of money to file your claim, but that’s another way to handle the unjust charge.

“And how crazy you’d have to go through all of this over a $230 false charge from a car rental agency. But they can ruin your credit for seven years,” Clark says.

Ignore Bill Collectors at Your Own Risk

I was particularly interested in Clark’s answer. In 2015, I got into a car accident. As it turns out, there was a recall-related back order on my airbag, which caused an unusual delay on getting my car back from the shop.

Just before the rental car period that my insurance covered expired, I prepared to turn in the vehicle and find a ride to work in the meantime. However, the rental car company got on the phone with my insurance company, which agreed to continue to foot the bill for the rental car due to the unforeseen delay.

I put up resistance multiple times on the three-way call. I’ll find a ride to work, I told them. I just don’t want to be charged anything for keeping the rental car for longer. Both parties insisted that they’d already worked it out and that I didn’t have to worry.

After driving around my rented van for a few more weeks (that’s what they had available), I finally got my car back. When I returned the rental, though, the rental car company charged me full freight. Apparently, the insurance company had reneged.

I successfully disputed the charge with my credit card company. Still, I started getting collection calls and letters in the mail, which I ignored. I didn’t know what else to do at that time, and I was fortunate that it didn’t impact my credit.

If I faced that situation again today, I’d probably just pay the bill upfront, stop doing business with the company and leave a detailed review of what happened in as many places as I could.

Final Thoughts

If you want to finance a house or car, apply for a new credit card or even get a job in some instances, your credit score matters.

I understand not wanting to pay a rental car company (or any other entity) when you get overcharged. If it’s an innocuous amount of money, it’s mostly about the principle.


However, keep in mind that if you dispute a charge and it gets sent to collections anyway, your work doesn’t stop there. You can choose to pay the charge or fight it — or else you’re risking your credit for seven years.

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