Do NOT Pay Collections

by | Apr 15, 2021

I have completed thousands of credit consultations. In about 70% of these cases, my client has either paid a collection account in full without sending a Pay for Delete letter in conjunction or is currently on some sort of repayment plan. When they tell me this, all I can do is shake my head. My only recommendation is either to keep paying the collection (since they have already admitted guilt to this debt) or tell them: “Let’s work on removing the collection account you’ve ALREADY PAID OFF.” The proper thought and question here is… If I paid a collection account in full and it’s still showing up on my credit report, why did I spend my hard-earned money in the first place?


You Should Not Do It. Here Are The Reasons:

1. All collection companies are trying to do is take your money. For example, let’s say you owe Verizon Wireless money. After 6 months of delinquency, your account changes to charge off status meaning at the end of the year the finance department of Verizon reports this account as a loss. This is reported to the credit bureaus. Then, they sell off your account to the highest bidder, a collection agency. The collection agency pays a portion of the total amount owed to own that debt. They usually pay pennies on the dollar. Then, they call and harass you to collect the money. For example, let’s say the total balance owed is $200. The collection company paid $20 for that total balance. If they collect the full $200 from you, they have made a HUGE profit of $180 for that one account. This is how collection companies stay in business.
2. In order for a collection agency to collect from you or go after you legally, you first have to admit to that debt over the phone or by letter. This is the reason their phone lines are recorded, and the call rep needs to read you a mini-Miranda before speaking with you. They have you on tape confirming your identity. Legally, you did not sign a contract with ABC collection agency. You did not accept services from the collection company. You originally signed up for phone services with Verizon, remember? You do not have a contract with the collection company, so who says you owe them! Unless you admit to the debt over the phone, they can only assume you do not owe that debt.
3. Statute of limitations is the time frame that a collection agency has legally to come after you full force. The statute of limitations is 5 years in most states. If you are still getting letters or calls after 5 years and you pay it or get put on a repayment plan, then that account will restart the timeline! In addition, it will count negatively against you because you admitted to guilt by paying the collection account. As a result, your credit score will go down.
4. A debt collector CANNOT add their own fees and interest to the original balance to inflate the debt to get more money out of you. If the original contract between the debtor and the original creditor does not allow for collection fees and interest to the original balance, then this is a violation. For you to find out or for them to prove that what they are doing is legal, they must present you with the original contract, which they likely do not have. Ask the debtor for it and demand removal from the bureaus.

In conclusion, if you pay a collection account it is a bad move on your part because it will remain on your credit report, waste your money, and reduce your credit score. If you do not do anything, it is bad because the negative trade-line is sitting on your credit report affecting your score.

If you want to spend money with the intent of removing the collection account, you should follow my training step by step. Do not get overwhelmed by paying these accounts and change your life for the better!

If you’re ready to start removing collections the right way, without paying the full debt, then schedule a call with me and let’s fix your credit!

Boost Your Credit Score 50+ Points in 90 Days

Recent Posts

Talking Personal And Business Credit With Real Estate Investors

Jordan joined Akin Developments in their monthly Real Estate Meetup in Baltimore to talk about building personal and business credit. Most real estate investors know credit is very important to their businesses because many times it is hard to complete a full...

Business Credit Card Road Map

Do you have itch for a new business credit card sign up bonus? Don’t want to jeopardize your Chase 5/24 status? Don’t want it to report to your personal credit? Don’t want a hard inquiry on your personal credit? (AMEX Rule Applies) Well today is your lucky day!!!...

Start Improving Your Score with Credit Builder Secured Card

Start Apply in Minutes + No Credit Score RequirementDeposit Put Down $200 Deposit To Open Your Secure Credit CardBuild Build Credit by Making Purchases With Your Credit Builder CardGet a Fast Reporting Card to All 3 Bureaus! What is the Credit Builder Secured Card?...

Instant Boost to You Credit Card Utilization

What is MJC Online Jeweler Store? MJC is a trade line company that will give you an instant boost to your Overall Credit Card Utilization. This program will add a $5000 trade line to all 3 credit bureaus, which will ultimately bring your overall credit utilization...

What You Must Know About Unsecured Loans

At some point, every one of us will have to go through obtaining a form financing of some type. It may be something as simple as applying for a credit card. Still, the process can be a little complicated if we don't understand the type of debt we're incurring, ...

How to Hack Travel Points: A Guide to Manufactured Spending

If you like to travel, then I'm sure you know that spending on credit cards is a great way to amass points. In turn, these points can be used to gain flight discounts, cheaper hotel stays, and much more. Sometimes spending directly with your credit card doesn't give...

How to Fix a Bad Credit Score: Tips and Tricks

A bad credit score can be a big, ugly stain on your financial portfolio, limiting your access to certain benefits.  It seems like just about everything, even the most innocent incursion, can lower your credit score and sending you on the fast track to figure out...

Manufactured Spending Avenues

Manufactured spending (MS), put in simple terms, is the method of spending money through a financial instrument that results in rewards. The sum of rewards earned through spending this way is dependent on the amount spent and the frequency of spending. Most avenues of...

Why a Targeted, Low Volume Manufactured Spending Strategy Is Better

Manufactured spending (MS) is a very simple and effective loophole in the financial system where you can buy cash equivalents such as gift cards online with a rewards earning credit card.  Then later reclaim the monetary value of the gift card, and benefit from...