NEVER PAY COLLECTIONS! Why you should never pay Debt Collectors! - YouTube

What we're going to talk about today is why we tell people, never pay a debt

collector and what specifically that means. In a conversation when I

talk to someone, typically they say, "oh I'm about to pay off all my debt collections," and they

think that their credit is going to be raised by paying off debt collection

accounts. Well for one, paying off a debt collection does not remove it from your

credit report! So, they have to make sure that the debt collectors are

following specific rules and when I say don't pay a debt collector, it does not

mean that you never have to pay it and it does not mean that you would ever

stop paying other bills like your credit card or your car loan or anything like

that. It also does not mean that the debt collector cannot sue you. So, within

six years of the time that the account got sent to the debt collection agency

they can legally sue a client, but through our process we make the debt

collection agency prove that they have all the correct information and make them prove it's

a valid account. For example if I have a debt collection account for four

hundred bucks and I rush to pay it, it's not going to come off my credit.

It's going to update and sometimes it will report for seven years from the

date of the payment. It reports as a paid collection. Through our

process the debt collector has to prove that they have the right to report on

your credit. When we're requesting information from them they have to show

documents with the client signature, They need to show all of the documentation

they have that really proves that the client owes that debt and they need

to furnish all the documentation to prove that and to show that. It's like when you

go to court and you file a discovery they have to show all the evidence.

The credit reporting system is quite unfortunate because it's a "guilty until

proven innocent" and through our process we're forcing the debt

collectors to prove this information. so they need to prove that the

debt is valid and collectible, meaning that it hasn't been past seven years - the

federal statute of limitations and actually in Washington State it's six

years so after six years a debt collector cannot sue a client. I know

a little earlier I made it sound like from the time the debt collection agency

acquires the account, but it's actually six years from the date of the

initial late payment on that account that led to it being sent to collections.

So they can wait six months or three years to send it to collection. Student: "I have a question."

Student: "So basically limits you said I'm going

to try to make sure I heard correctly. You said when they reported, that it's the first time they report."

Jesse: "It's not when they purchased the debt collection account, it's the date of the initial

debt. Say I owed Chase Bank right and I default on that credit card, well it's

the first late payment that led to that card being charged off. So it'd be the

first 30 day late that reported that you see it on the credit report and it just

continues to go 60 days 90 days 120 days charged off. But it's from that first

late payment, so six years is the state statute of limitations in Washington state where we're at.

Seven years is the federal statute of limitations. So after six years

from that initial late, they cannot be sued. After seven years, it cannot

report on their credit. So the law states that it's seven years

from the date of last activity so that's where that payment can come into play

and can be counted as last activity. So when we're telling a client never pay a

debt collector, it's mainly because; 1. Paying doesn't remove it. 2. The debt collector has to

furnish all the proof and the burden is on them after a client has hired us to

deal with their credit. The debt collection agency has to prove that they

have the legal right to report on the credit that they have all the correct

documentation and that everything is reporting accurately. If they can't prove

it, it has to be removed from the credit report, by law. So they might not take

it off real quick and easy, they might send all the paperwork back and continuously

send it, but if the paperwork's not correct, then there's more disputable

reasons why we can get that account removed. So really this is just to

clarify because a lot of people think I'm saying don't pay your debt, that's

not true you want to pay your debt, because that's part of building your

positive credit history. But when I say don't pay a debt collector, it doesn't

mean that you'll never pay them. But it means through our process, we want to

have that debt collector hold the burden of proof and we want them to prove that

all the information on there is accurate timely and verifiable. If they can't do

that, they have to remove it from the credit report. Now if they remove it from

a credit report technically that clock is still ticking for the six-year limit

for them to be sued. But if the debt collector doesn't have the right

information to prove that the client owes that debt, how are they going to

prove it in court? So it's very rare, but still possible, that we see a collector

come after a client after the information has been removed. Any

questions? Student: "Does this fall along the lines of consolidating debt?" Jesse: Consolidation of debt would be a little bit different, that would be

more like I have a two credit cards that are nearly maxed out and I want to get a

consolidation loan. That would be taking those two credit cards and

putting them into one loan that has a lower interest rate. Consolidation loans

will allow you to consolidate debt collections into it. But again, paying

that debt collector doesn't remove it from the credit and there's really a

minimal increase when that debt collection updates to a zero balance. So

I wouldn't recommend people include debt collections in their consolidation.

Right now really we're averaging about an 85 percent deletion ratio with

collection accounts, because a lot of them aren't actual debt collectors they're

debt scavengers or junk debt buyers. So again, say I chase a thousand bucks on

a credit card and then Chase charges it off. Chase gets a tax write-off for

doing a charge off, it means that they took a loss. Then you know they

have policies and insurance in place to protect them when things like that

happen. They will take that debt and sell it for pennies on the dollar to a debt

collector. When that debt collector buys that thousand-dollar debt, they

include fees and interest and all kinds of junk on there. When you pay them,

Chase isn't getting any money, it's all going straight to the debt collector.

That's giving these debt collection agents huge commissions. I mean those

guys that call you on the phone, the reason they're so aggressive they're

commissioned based employees and there's huge Commission in there on junk debt. So

really, we we take it and put the burden of proof on them and that's why I

tell people to never pay their debt collection accounts unless they give

them a letter saying that when once it's paid it's going to be deleted from your

credit report. And/Or they have furnished all the required documentation.

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