Why You Shouldn't Pay Off Your Collection Accounts

our piece family give everybody a few minutes top-1 make sure your liking and sharing the video of everyone who is following and watching this live on IG I'm actually filming this for the for my new youtube channel so you'll see me looking directly at this camera but definitely make sure if you guys have any questions well hop into the Q&A a little bit after this video is wrapped up so today we're going to talk about why you shouldn't pay your collection accounts off now just a little bit about myself my name is Wil Roundtree owner of we management services credit master instructor for the Jay Morrison Academy the author of the book credit is king if you have not picked up your copy of the book definitely make sure you do so I mean we literally get testimonials every single day people reaching out to us stating that not only has the book giving them information they've given it to their teenage kids to properly equip them that are in high school getting ready for college I had a lot of people have success just in rebuilding their credit improving their credit understanding the farm fundamentals of a business credit so just a lot of different content information that's in that book and like always say that what separates the successful from us successful is information so you know if you're trying to program your mind with new information you definitely want to pick up that book but uh you know wonder do they always like to talk about I'm very passionate about is 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 entire way I view life it's changed the entire trajectory of my life has put us in a position to where now we've been able to travel the country and and give people this information for free 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 shout-out to my mentor my brother and my partner Jake Morrison you know I've had many many many mentors along the years but uh you know but you know if you anything like me you definitely didn't grow up understanding anything about credit you know for so many years we've been taught that credit is bad credit is the devil this I mean we've heard all these different cliches but more importantly that we've always been taught to look at credit from the lens of a consumer as opposed to a business person and so for all my entrepreneurs and business owners and up-and-coming entrepreneurs and business owners seasoned and experienced business owners they understand your credit is the lifeline to your business and understanding that more once you understood that you start to gauge and look at credit from a different lens and that's really the thing that I want to show people and why I'm so passionate about providing this information again for those who just hopped on an IG I'm also filming for this video live that will be going to my youtube so for anyone who has not subscribed to the YouTube yet mr. will Roundtree on YouTube mr. will Roundtree on YouTube I'm going to be dropping a lot of great content in the next week or so so definitely make sure you go and subscribe like and share this video and so just going back to credit you know because we've been looking at credit from a consumer standpoint you know we we have all these sayings about credit you know we think credit is just for about being able to purchase a house to be able to purchase a car but you know I talk to parents who have kids getting ready to go to college your credit dictates in determines whether you can help them get a student loan you know like always mentioned for those who have kids and children that are still in school your credit indirectly can dictate what schools only your kids go to school in so it's just so much more that credit provides and brings auto insurance you know your credit scores and excuse me your your premium your auto insurance premiums are a direct reflection of our of your credit score hell life insurance companies are looking at ways to use credit to dictate what type of premiums you get from health insurance I mean scuse me for life insurance policies I mean employers I mean the licious goes on and on and on and on and on I mean that three digit number pretty much is going to be the ultimate dictator the ultimate barometer of our lives and we have such a taboo talking or there's such a taboo about talking about credit about our personal credit and our personal finances and different things like that that we need to first of all we need to release those shackles of pridefulness we need to release those shackles of being ashamed because someone can help you if you're not letting them know that you are in need of the help you know seek out the information seek out the knowledge you know seek after mentorship which you know I was fortunate enough to be you know in the presence of a mentor who directly gave me information about credit that literally changed my entire life and so in 2003 I had a real estate attorney who was a mentor of mine he didn't even know he was my mentor he was just so brilliant and so so financially savvy I would literally just call him to pick his brains just so I can soak up game and get different information from him and what he said really resonated with me all the way until 2018 today if he said will eventually credit is gonna become 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 found out wasn't able to rent an apartment wasn't able to buy a car without a cosigner I mean Here I am 25 years old now I'm needing a cosigner for vehicle and so those things really dawned on me because you know I was always one of independence I mean I moved out it got my own apartment at the age of 17 while going to college and working a full-time job so I was an extremely independent individual growing up but I knew that as long as my credit was going to be a challenge for me you know I quickly had to rely on others to be able to help me position myself even further in life and so with that being said you know I just made it a quest of mine to find out as much information as I can about credit understanding you know the importance of it what is credit how they improve it and you know it actually took me about two years to personally improve my own personal credit situation I mean my credit score was in the low 400s back to around 2005 and you know in I didn't even know the only thing I knew is I kept getting denied for everything and like what a lot of us used to do at those times is we get denied and we go and apply somewhere else hoping that for whatever reason they're going to eventually approve us and then next thing you know you're 25 applications in whether you're trying to buy that car or you're going on a credit card application binge because you're trying to find someone that approve you for credit with bad credit first of all that doesn't exist you know I get people that reach out to us all the time saying hey is there a place where I can get a loan for bad credit the answer is no now yeah definitely you can go down to a payday loan place and you know deal with the interest rates of those places for five six hundred percent but you don't have to do that because what you're going to pay back in interest over time you're going to pay for that move five at times over you might as well invest a little bit of money a little bit of knowledge a little bit of time and improve your credit because credit is the lifeline to your business and even just your personal life I mean credit should be looked at you view that as a just-in-case because we understand life happens you know I'm going that says we're one that believes that at 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 any liquid capital and you don't have a credit card because again that credit card can kind of be that Jason just in case of emergency type of situation but throughout that two years of my quest of learning and really educating myself about credit one of the things that I come to find out is that dealing with those infamous collection accounts and so if you notice I talk I say you know why you should never just pay a collection account off and I'm going to give you guys that information but I'm telling you this information is not only gonna save you time energy and money but it's definitely gonna position you to look at things and how you do things a little bit differently for all those who are out there trauma restore and rebuild and repair their own personal credit and so the thing in relationship collection accounts first of all for those who don't know what a collection account is because I have had people ask that question it's essentially where you have an original creditor Laura let's go to so let's say you have a credit card and you have a $500 limit on that credit card okay let's just say this is visa alright for whatever reason you default meaning usually they send your account to collections after four months of missed payments so after four months of missed payments you have 120 days late on your credit report generally they'll send that code that account to a collection agency meaning a third party company bought this debt for pennies on the dollar and usually they bought it for about five to ten cents on the dollar sometimes even less than that because they bought a portfolio of debt meaning there's hundreds of accounts of people who own this particular credit card company so they this particular account just so happened was in that portfolio so this account those two collections now the same thing would charge off accounts and essentially what a charge off is is you have where the company has written the debt off on their taxes and this is common with some credit card companies depending on the and then also when you have a vehicle that gets or may get repossessed meaning you hope let's say you know $15,000 on the vehicle you turn it in or they come in repossess it or whatever the case is what happens is that vehicle then goes to auction and then myself were you know ten thousand so they may have rolled it is still a five thousand dollar gap what may have happen is is that they wrote this amount off on their taxes so now you have a charged off account okay now charged off collections it all encompasses the same thing it all is going to affect your credit profile in the same fashion in one collection account one charge off account again drop a credit score anywhere from fifty to a hundred points easily whether that collection account is for one dollar or a hundred thousand dollars it's going to impact you the exact same way because what happens is is that the credit report does he read the dollar amount now of course you have your debt to income ratio which can make it lock side it well overall what it does is it reads it being a collection account it reads it being a charge off and that'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'd be very surprised you know there are companies out there where if let's say you wrote a check for a bill and you're $1 off they will send you to collections for that one dollar because everything that they do is all computer-generated so only thing that happened was their computer read that you were a dollar short and they sent you to collections so understand that you always want to make sure because I see this happen a lot to is people are scared to open their mail you can't be scared to open your mail because one dollar you know debt can drastically impact our credit scores and of course we want to mitigate and minimize these type of scenarios as much as possible so so now get into the meat potatoes why don't we want to pay off our collection accounts so I give you an example so let's say you have a credit profile and you have a collection account that is five years old okay and that same Visa card that's $500 now first of all all debt has what's called a statute of limitations essentially the statute of limitations mean the time period that they can come and actually sue you for that day now most states in almost all states have different statute of limitations I recommend and you can actually just go to google and type in you know statute of limitations for Las Vegas for credit card debt statute of limitations for you know Chicago statue limitations for Atlanta and it will actually give you the time period that that company has to suit you now the statute of limitations does not mean how long it stays on the report I want to preference that because a lot of people think that's what the case is the statute of limitation is essentially is the time frame they have to sue you for that debt so if you have a collection account on your report that's five years old from the last date of activity the last date of activity means the last time they received a payment for this account so if the last date of activity was five years ago it is now outside the statue 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 time period two and a half years in you you know felt bad and you feel morally obligated to make some type of payment arrangement to pay this $500 car bill so what happens is is you called and you set up a payment arrangement and you're going to send them you know $50 a month okay until you pay this off in full now what essentially happened is that this five year clock just reset meaning let's say for whatever reason you default and you stop making payments and you pay $400 into the 500 but you just say you know what I'm Todd a pan that it's not going to help me anyway or whatever the excuse you come up with what's gonna happen is that this statute of limitations in the clock for that debt actually starts over so now the last date of activity is a year old and this company can now come back and collect after you Plus is going to 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 want to be very careful because keep them on all the collection agency is is it's a third-party company that purchased debt in the only way they can recoup their money is to be able to 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 don't have any jurisdiction to to do some of the threatening things that they said they are going to do to you so it's extremely important you understand how to you know tactfully deal with collection agencies because what you don't know can't hurt you Henson point making a payment arrangement and not fulfilling that now another thing is you never settle account never settle the collection account this is why going back to the scenario where you have the $500 account that's in collections and a lot of times what they'll do because they figure 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 to 50 dollar settlement now what happens is they'll offer you 250 you're feeling good because you're like man I'll save some money you know I'm able to not have to pay the whole thing but what essentially is going to happen is they're gonna say your account was settled for less than the full balance and is going to report on your credit report as a paid collection and that pay collection still is going to impact your score and ultimately could drop your credit score and here is why so going back to the scenario 5-year old account and you took the suddenly offer for two hundred and fifty dollars so what happens is is that that account being five years old it becomes less impactful owing your credit profile in less impactful to your credit score when you took the settlement off for what it did is it reported as settled for less than half the balance and it's going to show a pay collection account for zero dollars now keep in mind I just spoke upon earlier about the dollar amount of the collection account is irrelevant as far as it actually drop in your credit score so the fact that this is going to report like a brand-new collection account because now with zero dollars hits is why it's going to drop your score because keep in mind has been dormant for five years and so it had less impact because let's say you've been rebuilding your credit score to within in between that time and so again what you don't know can hurt you because I've seen this happen a lot of times I actually had a client who had got an inheritance and went off and paid about fifteen thousand dollars worth of her debt that was in collections charge-offs and everything like that and her score dropped tremendously and I mean she was distraught she was trying to purchase a house she didn't know what to do and ultimately because she didn't have access to this information so another reason why I tell people you want to go out and purchase that book not just because I'm trying to plug it because it's my but but all this information is in there you know I get people all the time they reach out to me and say hey I got a five-minute question can you hop on the phone with me and trust me I would love to speak with every each of one of you every single day but you're not right now I don't have the capacity but every question that you may have about credit is in that book so make sure that you go out and purchase that book you know trying to you know let's make it one of the top selling books if you know you know infinite amount of time you know it literally being the the mecca of about credit because you know all this information is in here so now this is the reason why you never want to pay election account like I mentioned this situation where she got an inheritance for were fifteen thousand dollars she went it paid about fifteen thousand dollars of her debt off and her credit score drop so paying a collection account off can drop your credit score especially if it's been in is if it's been a default excuse me if it's been less impactful from your file or on your credit profile for a amount of years you know because the last thing you also want you don't want to happen which I've seen this is you know typically the debt can only sit on the credit report for seven years from the last date of activity all right now does it always come off right at the seven year mark no and I talk to people all the time I'll just wait til seven years in there to fall off that's a myth it all doesn't always just fall off sometimes you have to dispute that information so you know which the creditors can book has some sample letters in there - just the FYI so I'll see scenarios where the debt is six point you know 11 months old they go through a settlement offer paying 250 on a $500 credit card not only did their score drop but now that debt can report for another 7 years on the report because they didn't fulfill the payment Raymond with that account so you want to be cognizant things again because what you don't know can hurt you or the last thing you want to do is which I've seen this happened before - you're getting ready to purchase a house you're at the closing table and then a collection accountant pops up you know I actually had a library bill from 1998 papa you know well they first always sent me a letter this is about four or five years ago and they couldn't put it on my credit because I mean the debt was over fifteen plus years of or somewhere within that time frame so again these companies will try to scare you but again because everyone who is on this live or you know Instagram or whatever watching the YouTube video knows this information like the back of their hand you don't fall for those tricks you know so because these companies will try to trick you so you don't want to just pay the collection account because one you run the risk of the statute of limitations tations a reoccurring you run the risk of the time you can report on your credit report you run the risk of your credit score dropping you run the risk of you just being out of $15,000 worth of collection accounts that you paid off that had no impact to your profile which is why it's important no matter where your credit is or how damaged it is you work on rebuilding it as well so I'm gonna give you guys a quick tip on what you should do if you have a collection account so one of the things that I always recommend is you do is call it pay for deletion essentially a pay for deletion is going back to the example you have the five hundred dollar a a collection account that was with Visa is five years old five years old and it's with collection agency okay now what you can do is you call the collection agency and you never admit to the debt a couple reasons why one is you never want them to try to come back and use it use anything against you in court especially if the debt is still within the staff limitations but more importantly even though the debt is reported on your credit report they may not be reporting the information accurately so the second option that I'm going to show you on how to handle collection accounts effectively is the reason why you never want to say hey it's mine you know yeah Brennan they may because keep in mind they charge interest and penalties and different things so this $500 may actually come out to five hundred seventy five and twenty five cents and if they're not reporting that down to the penny accurately they can't report this information on your credit report so I'm gonna talk about that year shortly but let's just say for the sake of this example five hundred dollar collection account a pay for deletion you call them a collection agency and essentially you're saying look I don't even know if the debt is technically mine or you know where you guys got it from but all I know is is I want to pay this account in full in lieu of you guys deleting it off my credit report now in some states you can actually go within your local city to that collection agencies office in person and pay that off and then what happen is they'll give you a deletion letter right there on the spot out here in Las Vegas we actually have a lot of collection agencies that set up out here which is why when I'm calling some of you guys you don't answer my phone call cuz you think I'm a collection agency but um you go there and you give them the payment info and I always recommend either paying cash these never give them your credit card or your checking account information okay always give cash money order cashier's check prepaid credit card but you never give them credit card for a natural check to your bank account couple reasons why let's say there's some additional debt lingering out there because debt can sit out there for about three to four years before it even pops up on your credit report so the last thing you want to do is collection agency and you pay the soft you give them a credit card and something else pops up out there they now have your credit card and you giving them authorization to go and swipe that credit card for that amount so never ever ever ever give them a credit card or checking account information if you have to go to your local drug store and get a prepaid credit card do that if your local you can give them cash which this is the least one I would do because you're always going to keep a paper trail which is why I always prefer a money order because you have a receipt with that money order or a cashier's check you know so that's how you want to deal with it now if they don't give you the deletion letter you don't pay you now they may try to trip you up and say well we'll give you a paid-in-full letter no you want a deletion letter so you want to make sure that you're extremely explicit with your detail and requesting that deletion letter now also make sure that you do pay in full the only way you can get the deletion letter is you do have to pay the dollar you do have to pay this debt in full if you do a settlement offer you lose your leverage for the deletion letter so essentially the payment info is your leverage keep in mind they want to get this off the books just as much as you want to get it off your credit report so a lot of times they will negotiate that with you to give you the deletion letter sometimes you do have those that play hardball they act like you owe them personally so they give you a hard time about a deletion letter and if that's the case you just politely hang up call back in I mean it may take you four or five calls but if for whatever reason they don't want to play ball I just don't pay it or I recommend not paying it right away which leads me to the the second option where is what my company does were very good at it I would like to say as you dispute it you want to dispute the debt disputing it now disputing it isn't saying that hey this is not mine I've never been late please remove basically there are laws based upon a Fair Credit Reporting that they give you and I as consumers and for those on Instagram you and I as consumers the right to be able to dispute anything inaccurate incomplete and unverifiable so if they can't validate or verify that debt down to the penny they have to delete it off your credit report no matter if you do owe it that is one of the legislation that was passed with the Fair Credit Reporting Act a lot of us don't even know that that's possible so we've had clients who had $357,000 accounts ie foreclosures short sales or whatever on their credit report and because they didn't have the proper paperwork to provide valid documentation that they're reporting this accurately to the penny they have to delete it so when you're disputing don't worry about the dollar amount a dispute is of dispute is a dispute it's irrelevant you want to dispute it now be careful about the different can't letters on the internet you want to make sure that you know you're not just taking something verbatim off the net because keep in mind usually something that's on the net it's probably been recycled a million times and what happens is these credit bureaus use a software by the name of Oscar and the e-oscar software recognizes that and that's generally why you get auto-generated responses saying we're not going to validate your dispute some time you know consider it a frivolous dispute it won't let you dispute it so you always want to make sure that if you are going to pull something off the internet that you're changing up the verbage and all of that again my credit is King book has sample letters in there if you're a part of the wealth mastery with us over at the J Morrison Academy I have an entire of you know lessons well one in particular about the spewing in sample letters and different things like that as well so if you're going to dispute it just make sure you dispute effectively now with the effectiveness of disputing make sure you do not and I repeat do not dispute online now I know it's tempting you logged into your Credit Karma your score just dropped jump though you know forty fifty points so you're excited and then you go and you click on the link that says dispute online you never want to dispute online because again you're utilizing the same the Oscar software so essentially you're trying to kill them with their poison they're immune to it so if you're going to dispute it always dispute on paper and you know that's you know one of the most effective ways and because seventy percent over seventy percent of credit reports have errors on them you would be extremely surprised on the results that you can get just by a simple dispute letter so hopefully this information was a value to you you know again my quest my entire mission really is just to be able to give you guys this information and pour back into you everybody on I G just to pour back into you guys and really hope that you guys not only take this information but also but actually do something with it you know a lot of times people say you know knowledge is power but it's not it's applying the knowledge and that's how you gain the power so hopefully you guys take this information and actually apply it you

Channel: Mr. Will Roundtree

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Keywords: Why you shouldn't pay off your collection accounts, how to boost credit score, business funding, 850 credit score, 700 credit score, credit inquiries, credit history, collection accounts on credit report, collection accounts and usda, don't pay collection accounts, closed collection accounts, paying old collection accounts, collection process in accounts receivable, completing the tests in the sales and collection cycle accounts receivable, dotloop, docusign

Id: 7uWYgoFJkO8

Length: 31min 17sec (1877 seconds)

Published: Sun May 06 2018