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Why You Shouldn't Pay Off Your Collection Accounts In 2020

Feb 27, 2020
our family of pieces gives everyone some top-1 minutes, make sure you like and share the video to everyone who follows and watches this live on IG. I'm actually filming this for my new youtube channel so you'll see me watching. right into this camera, but definitely make sure if you have any questions, jump into the Q&A a little bit after this video ends, so today we're going to talk about why you

shouldn

't pay

your

collection

accounts

now, just a a little about me my name is Wil Roundtree owner of us management services instructor credit teacher for the Academy Jay Morrison the author of the book credit is king if you haven't picked up

your

copy of the book definitely make sure you do I mean we I literally get testimonials every day, people coming up to us and telling us that the book not only gives them information, but that they have also given it to their teenagers to properly equip them, who are in high school preparing for university.
why you shouldn t pay off your collection accounts in 2020
Many people have done it. success in simply rebuilding your credit improving your credit understanding the agricultural fundamentals of a business credit so there is a lot of different content information in that book and as always it says that what separates the successful from us is the information so that know if they're trying to program your mind with new information, you definitely want to read that book, but you know, I wonder if they always like to talk. I'm very passionate about your credit for a couple of different reasons, one because I know what it's done for. Me personally, my family, my friends, I mean, it's literally changed, you know, the whole way I look at life, it's changed, the whole trajectory of my life has put us in a position where we've now been able to travel. for the country and give the people this. free information, you know not only that, you know credit has helped me build, you know the company in three years of the tutelage of multiple mentors, definitely, even a shout out to my mentor, my brother and my partner, Jake Morrison, you know that I have had many. many, many mentors over the years, but you know, but you know, if you're like me, you definitely didn't grow up understanding anything about credit.
why you shouldn t pay off your collection accounts in 2020

More Interesting Facts About,

why you shouldn t pay off your collection accounts in 2020...

You know, for so many years we have been taught that credit is bad. Credit is the devil. I mean we've heard all these different clichés, but the most important thing is that we've always been taught to look at credit from the perspective of a consumer rather than a business person and so for all my entrepreneurs, business owners promising businesses and people. entrepreneurs and business owners, experienced and seasoned business owners, understand that your credit is the lifeline of your business and understand that once you understand, you start to evaluate and look at credit from a different perspective and that's really what I want show people. and why I'm so passionate about providing this information again for those who just hopped on an IG.
why you shouldn t pay off your collection accounts in 2020
I'm also filming this live video which will be streamed to my youtube, so for anyone who hasn't subscribed to YouTube yet, mr. will be Roundtree on YouTube mr. Over at Roundtree on YouTube, I'll be posting a lot of great content over the next week, so definitely make sure to subscribe, like, and share this video, so we'll give credit again, you know, because we've been looking. On credit from a consumer point of view, you know, we have all these sayings about credit, you know, we think that credit is just to be able to buy a house to be able to buy a car, but you know, I talk to parents who have kids getting ready . to go to college your credit dictates whether you can help them get a student loan you know as always mentioned for those who have kids and kids who are still in school your credit can indirectly dictate which schools you only their children go to school. it's much more than what credit provides and car insurance provides you know your credit scores and excuse me, your premium, your car insurance premiums are a direct reflection of your credit score.
why you shouldn t pay off your collection accounts in 2020
Life insurance companies are looking for ways to use credit to dictate. what kind of premiums do you get from health insurance, I mean life insurance policies, I mean employers, I mean the licious goes on and on and on and on, I mean that three digit number will pretty much be the definitive dictator. last barometer of our lives and we have such a taboo about talking or there is such a taboo about talking about credit, about our personal credit and our personal finances and different things like that, that first of all we need to free ourselves from those shackles of pride that I need to release those shackles of the shame because someone can help you if you don't let them know that you need the help that you know seek the information seek the knowledge that you know seek mentorship that you know I was fortunate enough to be, you know, in the presence of a mentor who gave me directly credit information that literally changed my entire life, so in 2003 I had a real estate attorney who was my mentor and I didn't even know he was my mentor. he was so brilliant and so financially savvy that I would literally just call him up to pick his brain so I could soak up the game and get different information from him and what he said really resonated with me until 2018 today if I said Eventually the credit will become in the new dollar, of course, I didn't know what he meant by that at the time, but when I moved to Las Vegas in 2005, I quickly discovered that I couldn't rent an apartment. buy a car without a guarantee.
I mean, here I am 25 years old. Now I need a guarantee for the vehicle and those things I really realized because you know I was always independent. I mean, I moved out and got my own apartment. at the age of 17 while going to college and working full time, so I was an extremely independent person growing up, but I knew that while my credit was going to be a challenge for me, I quickly had to rely on others to help me to position myself even further in life and with that being said, you know, I just did a search of my own to find as much information as possible about understanding credit.
You know the importance of this. What is credit? how they improve it and you know it actually took me about two years to personally improve my personal credit situation. I mean, my credit score was in the low 400s around 2005 and you know I didn't even know the only thing I knew was that they kept denying me everything and what a lot of us used to do in those times is we get denied and we go and we apply somewhere else hoping that for whatever reason we'll eventually get approved and then the next thing Know that you have 25 applications, whether you're trying to buy that car or you're on a card application binge. credit because you are trying to find someone to approve you for credit with bad credit, first of all, who doesn't.
There is, you know, I have people contact us all the time saying, Hey, is there somewhere I can get a loan for bad credit? The answer is no, yes, definitely, you can go to a payday loan place and you know, deal with the interest rates of those places are five hundred and six hundred percent, but you don't have to do that because what you're going to do is to pay in interest over time you will pay for that move five times more than you could also invest a little money, a little knowledge, a little time and improve your credit because credit is the lifeline of your business and even just from his personal life.
I mean, credit must be considered. He sees it as something new. case because we understand that life happens, you know, I'm going to say that we are among those who believe that, at a minimum, you should have access to at least $10,000 of revolving credit just because life happens and the last thing you want to do is be in a scenario where you know you don't have liquid capital and you don't have a credit card because, again, that credit card can be that Jason in case of an emergency situation, but throughout those two years of my learning quest and in really educating myself about credit, one of the things that I discovered is to deal with those infamous

collection

accounts

, so if you notice me talking, I tell you that you know why you should never just pay a collection account and I'm going to want to give you that information, but I'm telling you that this information will not only save you time, energy and money, but it will definitely position you to see things and how to do things a little bit differently for all those who are out there. trauma restore, rebuild and repair your own personal credit and therefore the question of relationship collection accounts, first of all, for those who don't know what a collection account is because I have had people do that to me question, it's essentially where you have an original creditor, Laura. let's go to, let's say you have a credit card and you have a limit of $500 on that credit card, okay, let's say this is visa, okay, for whatever reason by default, which means they usually send your account to collections after four months of late payments, so after four months of late payments, you are 120 days late on your credit report, they will usually send that code for that account to a collection agency, which means that a third party company bought This debt for pennies on the dollar and usually they bought it for five to ten cents on the dollar sometimes even less than that because they bought a portfolio of debt which means there are hundreds of accounts of people who own this debt company. credit cards in particular, so this particular account just happened to be in that wallet, so this account those two collections now The same thing would be canceling accounts and essentially what a write-off is is that the company has written off the debt on its taxes and this is common with some credit card companies depending on and then also when you have a vehicle that you receive or they may be repossessed, which means that you wait, let's say you know $15,000 on the vehicle, you turn it in or they come to get it back or Whatever the case, what happens is that vehicle then goes to auction and then I, where you know, it's ten thousand, so they may have rolled, there's still a five thousand dollar gap, which may be What happened is that they wrote off this amount on your taxes, so now you have a debited account, okay, now collections have been debited, it all covers the same thing, it will all affect your credit profile the same way in a collection account, a credit account. cancellation again, easily lower a credit score by fifty to one hundred points, whether that collection account is for one dollar or one hundred thousand dollars, it will affect you exactly the same way because what happens is the credit report reads the dollar amount now, of course, you have your debt-to-income ratio, which can cause you to block it well in general, what it does is it reads that it's a collection account, it reads that it's a charge. and here's how it's going to impact you from a credit score standpoint now also with that being said, you know, I get people to say, well, how do you get a collection account for a dollar?
You would be very surprised to know that there are companies that exist. There, if let's say you wrote a check for an invoice and it's $1 off, they're going to send you to collections for that dollar because everything they do is computer generated, so the only thing that happened was your computer read that you was missing a dollar and they sent it to collections so understand that you should always make sure because I see this happen a lot because people are afraid to open their mail, you can't be afraid to open your mail because you know the debt for a dollar .
It can drastically affect our credit scores and of course we want to mitigate and minimize these types of scenarios as much as possible, so now let's get into the meat, why wouldn't we want to pay our collection accounts? So I give you an example. Let's say you have a credit profile and you have a collections account that's five years old, and that same Visa card that's worth $500 now, first of all, all the debt has what's called a statute of limitations, essentially the statute of limitations means the period of time that I can come and actually sue you for that day now most states in almost all states have different statutes of limitations.
I recommend and you can actually just go to Google and type in the statute of limitations you know for Las Vegas for credit card debt statute of limitations for you know the statute of limitations for Chicago for Atlanta and it will actually give you the period of time that company has to adapt to you. Now the statute of limitations doesn't mean how long it stays on the report. I want to prefer that because a lot of people think that's the way it is. which is the case, the statute of limitations is essentially the period they have to sue you for that debt, so if you have a collection account on your report that is five years from the last date of activity, the last date of activity means The last time you received a payment for this account, forSo if the last date of activity was five years ago, it is now outside the statute of limitations, so they cannot sue you for this debt.
Now let's say this was with the collection agency for five years and within that five year, two and a half year period, you know you felt bad and you feel morally obligated to make some kind of payment arrangement to pay this bill. $500 car, so what happens is you call and set up a payment agreement and I'm going to send them, you know, $50 a month, okay until you pay this in full. Now what essentially happened is this five year clock just reset, which means let's say for whatever reason you default and you stop making payments and you pay $400 to the 500. but you just say you know what I am, Todd , and you're not going to help me anyway or whatever excuse you come up with, what's going to happen is that this statute of limitations on the clock for that debt actually starts over, so now the Last date of activity is one year and this company can now come back and collect after you.
Additionally, it will report on your credit report for an additional seven years, so this information is extremely vital because I see people make these mistakes all the time and you have to be very careful because keeping them around the collection agency is a scam company. third parties that bought debts and the only way they can get their money back is by being I can call you and get you to pay that debt and I mean literally you know I can start a collection agency today you know you can start a collection agency today and go out and do the exact same thing, they have no jurisdiction to do it. do some of the threatening things they said they were going to do to you, so it is extremely important that you understand how to know how to tactfully deal with collection agencies because what you don't know can't hurt you.
Point Henson make a payment agreement and not comply with it now another thing is that you never settle the account, you never settle the collection account, that is why we go back to the scenario where you have the $500 account that is in collections and many times it What they will do because they realize that you know what. he hasn't paid this 500 in five years, we may not be able to get the full 500, so we'll go ahead and offer them a $50 deal. Now what happens is they'll offer you 250. You feel good because you're like man, I'll save some money, you know I may not have to pay it all, but what essentially will happen is they'll say your account was settled for less than the full balance. and it will go away. report on your credit report as a paid collection and that payment collection will still affect your score and could ultimately lower your credit score and here's why, going back to the account scenario from 5 years ago and you suddenly accepted the offer of two hundred and fifty dollars, then what happens is that account, being five years old, becomes less impactful because your credit profile has less impact on your credit score when you canceled the settlement for what you did, it was reported as settled for less than half the balance and will show a payment collection account for zero dollars.
Now keep in mind that I just talked earlier about the dollar amount of the collection account being irrelevant to the extent that it actually lowers your credit score, so the fact that this is going to be reported as an account new collection because now with zero dollars is the reason your score will go down because keep in mind that it has been inactive for five years and therefore it had less impact because let's say you have been rebuilding your credit. Score within that time and again, what you don't know can hurt you because I've seen this happen many times.
In fact, I had a client who had received an inheritance and he went away and paid about fifteen thousand dollars. of her debt that was in charge-offs and all that and her score went down tremendously and I mean she was distraught, she was trying to buy a house, she didn't know what to do and ultimately because she didn't have access to This information is another Which is why I tell people you want to go out and buy that book, not just because I'm trying to get it published because it's mine, but all this information is out there, you know, I get people all the time reaching out. to me and say hello.
I have a five minute question. Can you talk to me on the phone and trust me? I would love to talk to each of you every day, but you aren't right now. Don't have. ability, but every question you could ever have about credit is in that book, so make sure you go out and buy that book you know, trying to make it, let's make it a best-selling book if you know you know it for an infinite amount of time. you know it's literally credit mecca because you know all this information is here so this is why you never want to pay the election bill like I mentioned, this situation where she got an inheritance for fifteen thousand dollars.
It was that you paid about fifteen thousand dollars of your debt and your credit score went down, so paying a collection account can lower your credit score, especially if you've been in, if it's been a default, sorry if it's had less of an impact on your file or in your credit profile for a number of years, you know this because the last thing you also want is what you don't want to happen, what I have seen is that debt can usually only stay on the credit report for seven years from the last date. of activity now, does it always come out right at the seven year mark?
No, and I talk to people all the time. I'll just wait until I'm seven to fall. That's a myth. Not everything always falls. sometimes you have to dispute that information to know which creditors can reserve, has some sample letters there; just FYI, I'll look at scenarios where the debt is six points, you know, 11 months ago, they go through a settlement offer that pays 250 on a $500 credit card not only did it lower their score, but now that debt can be reported for another 7 years on the report because they didn't make the payment Raymond with that account, so you want to become aware of things because what you don't know can hurt you or the last thing you want to do is something that I've seen it before: you're getting ready to buy a house, you're at the closing table and then a collections accountant shows up, you know I actually had a library bill from 1998, dad, you know right, they always sent me a letter first , this was about four or five years ago and they couldn't put it on my credit because I mean the debt was over fifteen years or sometime within that time. marco, so again these companies will try to scare you, but again, because everyone who is on this live or knows Instagram or whatever who watches the YouTube video knows this information like the back of their hand, you don't fall for those tricks, You know this because These companies will try to trick you into not wanting to just pay the collection account because if you run the risk of the statute of limitations repeating, you run the risk of the time you can report on your credit report running the risk of If your credit score drops, you risk being left without $15,000 in collections bills you paid that had no impact on your profile, so it's important no matter where your credit is or how damaged your job is. about rebuilding it as well, so I'm going to give you a quick tip on what to do if you have a collection account, so one of the things I always recommend is to call it pay for removal, essentially a pay for removal.
Going back to the example, you have five hundred dollars in a collection account that was at Visa and it's five years old, five years old and it's at the collection agency. Well, now what you can do is call the collection agency and never admit the debt. A couple of reasons why one is that you never want them to try to come back and use it, use something against you in court, especially if the debt is still within the limitations of the staff, but the most important thing is that, although the debt is reported on your credit report, it may not be reported. be reporting information accurately, so the second option that I'm going to show you on how to handle collection accounts effectively is why you never want to say, "Hey, it's mine," you know, yeah, Brennan, they can do that. because keep in mind that they charge interest and penalties and different things, so this $500 may actually work out to five hundred and seventy-five twenty-five cents and if they don't report that accurately down to the penny, they can't include this information in their credit report. credit, so I'm going to talk about that year in a little bit, but let's say, for the sake of this example, a five hundred dollar collection account, a payment for elimination, you call them a collection agency and you're essentially saying look, I don't even know whether the debt is technically mine or you.
I know where you got it from, but all I know is that I want to pay this account in full instead of you guys removing it from my credit report. Now in some states you can go within your local city to the collection agency office in person and pay that and then what happens is they will give you a removal letter right there, here in Las Vegas we actually have many collection agencies that set up here so when I call some of you they don't answer my phone call because they think I'm a collection agency but they go there and give them the payment information and I always recommend paying in cash, never Give them your credit card or checking account.
Information is fine, always give cash, money order, cashier's check, prepaid credit card, but never give them a credit card for a natural check to your bank account. There are a couple of reasons why we'd say there's some additional debt outstanding because the debt can stay there for about three or four. years before it shows up on your credit report, so the last thing you want to do is a collection agency and you pay the soft, you give them a credit card and something else shows up, now they have your credit card and you give them authorization . go and swipe that credit card for that amount so never ever give them a credit card or checking account information if you have to go to your local pharmacy and get a prepaid credit card do it if it's your local you can give them cash. which is the least I would do because you're always going to keep a paper trail, that's why I always prefer a money order because you have a receipt with that money order or a cashier's check, you know, that's how you want to take care of it now if not they give you the elimination letter, they don't pay you now, they may try to trip you up and say, well, we'll give you a letter paid in full, no, you want a elimination letter, so you want to make sure you are extremely explicit with your details and request that removal letter now.
Also make sure you pay in full. The only way to get the removal letter is to pay the dollar you have to pay. Pay this debt in full if you make a settlement offer, you will lose your leverage for the elimination letter, so essentially the payment information is your leverage. Keep in mind that they want to get this off the books as much as you want to get it off your credit. report, so many times they will negotiate that with you to give you the removal letter. Sometimes there are people who play hardball and act like you owe them personally, so they give you a hard time with a removal letter and if that's the case, just politely hang up and call back.
I mean, it might take four or five calls, but if for some reason they don't want to participate, I just don't pay it or I recommend not paying it right away, which brings me to the second option where that's what my company does. They were very good in that I would like to say while you dispute it you want to dispute the debt dispute it now dispute it is not saying hey this is not mine I have never been late delete basically, there are laws based on a fair credit report that give you and me as consumers and to those on Instagram, you and I as consumers have the right to be able to dispute anything that is inaccurate, incomplete and unverifiable, so if you can't validate or verify that debt down to the penny, you have to remove it from your credit report, no matter if You owe it, that's one of the laws that was passed with the Fair Credit Reporting Act and many of us don't even know that's possible.
So we have had clients who had $357,000 in accounts i.e. foreclosures, short sales or whatever on their credit report and because they did not have the proper documentation to provide valid documentation, they are reporting this accurately to the penny, they have to eliminate it. when you're disputing don't worry about the dollar amount a dispute is a dispute is a dispute is irrelevant you want to dispute it now be careful with the different letters of "can't" on the internet you want to make sure you know yourself We're not just taking something word for word out of the web because keep in mind that typically something that's on the web has probably been recycled a million times and what happens is these credit agencies use software called Oscar and the e-oscar software recognizes it. and that's usually the reason you get responsesautomatically generated that say we are not going to validate your dispute.
At some point, you know, consider it a frivolous dispute, it's not going to let you dispute it, so you always want to make sure that if you're going to take something off the Internet that you're changing the verb and all that again my credit is King's book has letters of sample there if you are part of the wealth mastery with us at the J Morrison Academy I have a whole Some of you know the lessons well, one in particular on how to throw sample cards and different things like that, so if you are going to dispute it, make sure you do it effectively now with the effectiveness of disputing, make sure you don't do it and I repeat. don't argue online now I know it's tempting, you logged into your Credit Karma, your score just went down, you jump even though you know forty-fifty points, so you're excited and then you go and click on the link that says online dispute, you never want to dispute online because again you are using the same Oscar software so you are essentially trying to kill them with their poison, they are immune to it so if you are going to dispute it always dispute on paper and you know you know one. in the most effective ways and because seventy percent more than seventy percent of credit reports have errors, you would be greatly surprised at the results you can get with just a simple dispute letter, so I hope this information be valuable.You know again that my quest, my whole mission really is to be able to bring you this information and share it with all of you on IG just to share with you and I really hope that you not only take this information but also actually do something with it.
A lot of times people say you know knowledge is power, but it's not, you apply knowledge and that's how you get power, so I hope you take this information and apply it.

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