Credit Boost Blog
Never Pay Collections Or Charge Offs
Today’s topic, and our advice to you is – DO NOT pay collections! Here we will be explaining the tricks, tactics and other things collection agencies will try.
Why should you not pay collections? Here’s what happens.
Let’s say, for example, you owe a debt of $300 to Verizon Wireless. If the debt is not paid, eventually Verizon will want it off their books, and will sell the debt to the highest bidder. This is called a “charge off”. The charge off company is able to pick up the $300 debt for pennies on the dollar. Meaning, a typical $.03-$.04 per dollar of debt will become less than $15 for ABC Collection Company to pick it up. Do you see where I’m going here?
The debt is now in what’s called “charge off status”, and this is where you will begin to get harassed. You know—the phone calls come in from 800 numbers and numbers you don’t know, constantly harassing you. Not to mention the nonstop letters you will begin to receive.
Remember this—the collection company’s only job is to collect money. Why? Because they just bought a $300 debt for $15. Therefore, anything they collect over that $15 is a win for them. That’s why they’re able to pick it up for pennies on the dollar.
The First Thing to Think About
The question you need to answer first is—did you ever sign a contract with ABC Collection Company? Did you sign a contract with ABC Collection or Verizon? Where did you put your signature? Verizon, right?
Therefore, when ABC Collection Company begins harassing you, remember that you never did business with them specifically. So when they start contacting you, whether it’s by phone or letter, you are never going to admit who you are. If you do, you’ll be dead in the water. They will call you and say, “Hey John Smith, how you doing? We’re just checking to verify this is you. You’re on a recorded line.” The minute you admit who you are, you are now legally bonded to pay that debt. That’s why these calls are recorded, so they can get you, in that period of time, to admit to who you are.
There is also a thing called “statute of limitations”. You will want to know what this is for your state, because each is a little bit different. A lot of them are around three, five and seven years. Know your state’s specific statute of limitations, because after it expires, they can not legally collect anymore.
The Extra Cool Thing
There is very small print that will be on the collection letters that come in the mail, that will tell you when they can collect to. It’s very small for a reason – they don’t want you to see it. But, in addition to the statute of limitations for collecting the debt being listed, it may also say that the statute of limitations has passed and that the debt is no longer owed. So make sure you are looking at your letters. They should tell you exactly how much time you have left, and if it has passed the statute of limitations.
Moreover, if you begin paying a charge off collection prior to the statute of limitations, then it will reset for another seven years. For example, your statue limitations for ABC Collection Company to collect a debt from you is five years. Within this time, you make a small payment (not even a full payment). You’ve now admitted it’s yours, so the seven year clock for the debt to be on your credit report, and for them to collect even further, has been restarted. You now have a new seven year debt on your credit report.
The biggest mistake people make is paying charge off companies. Again, they don’t have any legal right to collect the debt, unless you verify, whether by phone or letter, who you are, and therefore, that it is your debt. Once someone has paid the debt, they have a “paid collection”. Most people think, “I paid this collection. It’s great.” However, and this is where the education comes in, now you have a paid collection and guess what doesn’t happen? Your score does not go up, your score does not go down. You just have a satisfied collection on your credit report, and you’ve made whole to company that you didn’t even owe in the first place.
Again, keep in mind that if you pay the charge off, when you go to purchase a house, a car, apply for credit cards, you now have a satisfied collection on your credit report that lenders will see. The collection, just because you pay it, does not come off your credit. The collection still stays there. It just says paid. What sense is that? That makes no sense to do that.
What Are Your Options?
- Pay it and have a paid collection on your report, or
- Don’t answer the phone calls on a recorded line and/or agree via letter, and wait for the statute of limitations to pass
We Get It
Most people don’t want to deal with harassing collections calls. But understand, their only job is to keep calling you. They just want you to pick up and admit who you are. Instead, just say “I’m not sure who so-and-so is. You have the wrong number.” That’s how I suggest answering their call. And if you are wondering, “But it says Verizon can transfer the debt to another company and that I’m still legally bound to the other company.” Horseshit. No you’re not. The law’s the law, and until you verify it via phone or letter, you’re not legally bound because they cannot prove that it’s you. If you don’t verify via letter or phone, how are they going to know it’s you? I am only telling you that if you’re paying these charge off collections, you technically don’t have to. You never signed any paperwork with the collection company. *
*I am not an attorney. I am not giving you legal advice. This is for educational purposes only.
What is it costing you to have collections and to have bad credit right now?
It’s costing you:
- High interest rates
- Not being able to get into a good vehicle
- Higher payments on your home
- Not being able to buy a home and having to rent
- The inability to start your business or get business credit cards
- Most importantly, it’s costing you so much because you don’t understand credit
After all of this, if you are still saying, “You know what? I just want to pay these collections so I can have them stop calling me,” I would suggest contacting us here at The Credit Game. We know the law and FCRA regulations. We know what legally can and can’t be removed, and the statutes for each state.
If you’re going to pay it anyway, and you need help removing stuff, why don’t you pay a reputable company who already knows how to do it the right way, and the fast way? At least you won’t have a paid collection, and instead of having a seven year collection that’s going to be on your credit because you just paid it, you can actually have it removed the right way because we know the law. We know what can be removed—the negative, obsolete, unfair, unduly, negative charge offs—from your credit report, and what you’re not obligated to pay.
We Can Help
We’ve have a decade’s experience, and a phenomenal system called “The Credit Game”. We give you the education to help you change your life. Just remember, this is for adults only. Sandboxes are for kids, credit is for adults.
We can help you remove the negative information. If you need help adding tradelines, putting on the positives, we can help with that too. We then educate you so you never go backwards again. Our founder, Mike learned the Credit Game, and took himself from a 515 credit score into the 800s, and never went back because of the Credit Game platform he put together.
So give us a call today. All it will cost you is 15 minutes on the phone. If it's for you, we'll put something together, we'll make it work:
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