3 Reasons Why You Should Not Pay Your Debt

Paying off an old collection or charge off will increase your credit score.
This is a huge MYTH!

Effects of Paying
When you pay an older collection account or charge-off account, your credit score most likely will suffer.
Think twice before paying off an old collection or charge off. By paying your debt, it renews the date of last activity. The collection company or creditors can now report the account for another 7 years.

Everyone knows debt collections are bad for your credit score. Any past due accounts including debt collections have negative effects. These accounts report on your credit report for up to7 years. As accounts age, they have less and less impact on your credit score.

Many consumers believe by paying off collections or charge-off accounts, that it will raise their credit scores. It certainly seems logical; however it is far from the truth. If you are concerned about your credit score, paying off debts prior to obtaining any other type of loan or mortgage can greatly hurt your credit score.
Ultimately, if it is an older account when paid off (or payments are made on the account), by doing so can be devastating to ones credit score. The recent activity of any derogatory item has a big impact on how it effects your overall credit score.

Is the Debt Still Valid?
After a certain period of inactivity on an account, a debt becomes time-barred and debt collectors can no longer sue you for it. This period is known as "the statute of limitations on debt" and varies by state. If the statute of limitations has passed, it is illegal for a debt collector or creditor to sue you.

You need to be careful in communicating with a debt collector because the debt statute of limitations can easily be restarted by acknowledging that you owe the debt, making a payment, entering a payment plan, making an agreement to pay or making a charge on the account.

After 7 Years
Collection and charge-off accounts should only remain on your credit report for 7 years. It is important to check your credit reports as the credit bureaus often continue reporting these derogatory accounts over the 7 year limit.

If you have any questions regarding collection accounts on your credit reports, call our office today for your complimentary credit consultation. We look forward to hearing from you. 480-502-5554

LEGAL DISCLAIMER: The advice provided is for informational purposes only. It is not to be construed as Legal Counsel or Legal Advice.

[baileychaork]

Am so happy today being part of lucky ones having 840 credit, thank to Mr Johnny Cole credit builders. 🙏🏻

[sadikmeah]

It's amazing how he can talk and balance that ball on his head at the same time!
👍 😎

[MinutestoRouletteFortune]

The collection company does not have a contract with YOU until you enter into an agreement for payment which produces a contract. They don't hold the original debt contract and therefore cannot collect on it if you know the laws. Few do. All they have is the last statement which does not PROVE you are the original holder of the debt in court. You can easily say it is ID fraud acct as they have no way to prove otherwise. Without a contract from the bank issuer, proof of any purchases for you to contest, or an agreement with the collection is NO justifiable claim by them in any court! Learn the ever enter into a payment agreement with ANY credit collection agency!! Show up to court and compel them to show the original contract from the bank or a contract from the collection agency who is suing you where you have entered into an agreement with YOU. There is NONE, and they simply have NO case to collect anything. Period! Don't let then scare you into getting into an agreement contract with the credit collectors. Don't talk to them outside of the court room for ANY reason. Write a letter asking that they prove you are responsible with the original contract from the issuer as proof as well as the contract you have with them (there is none) proving they have a right to collect it. You will get the only thing they statement! They will act like they are on your side and they ARENT!! Either way, your credit is destroyed so why bother!! They bought your "debt" for pennies on the dollar and the bank wrote if off anyway.

[jerrysetlerr]

I knew this I used to date a woman from a credit agency and she told me if its unsecured you have nothing to lose just dont answer thier calls and it rolls to 0 after 7 yrs anyway. Paying them and talking to them makes it worse for you and drags it out longer let them come to you house and serve you with it if they want it so bad . When your screwd your screwd anyway so your not going to walk into a Polaris shop for 7yrs and buy a new sled unless you got cash, so what? That's what gets you into trouble anyway.

[straycatannie]

I'm so broke that I can't afford to pay attention!

[livefreeinuk]

my credit score is so low i can't even pay with cash

[heidistandell]

Where I live in Canada the time limit to take a person to court over a debt is 2 years. If they or a third party collection agency fails to do so they CANNOT sue you over the debt. Often it will be the company you owe who will call early on but if the debt is for hundreds, not thousands, it is not worth their time. Third party collection agencies PURCHASE debts and, depending on how old is the debt and amount is owed, pay as little as 10 percent of the amount. When 3rd party agencies call ask who owns the debt. Most likely they will not give you a straight answer because THEY own the debt. These agencies can be very harassing. They abuse because they are  companies focused on generating huge, quick profits and will say and threaten and tell you outrageous things to get your money, doing NO favour to the original company or to you! Your money never goes to the company you owe to. 3rd party agencies almost never take you to court, and CANNOT if they start calling after the limitation period is over. They take the responsibility for the debt from the company who will end their collection process since they got some compensation. Often debts are purchased by company after company, so don't be surprised if years later an agency calls you for collection! If you can't pay it (bad things happen to people all the time so don't be judgemental! I know this as I am disabled by a chronic illness I thought would NEVER get as bad as it did) you are better to not try to settle later on. Your debt will be on the credit record for 7 years after defaulting on it -- if you start paying again years later it will EXTEND to when you began paying it and you WILL NOT be in any better standing with the company to whom you originally owed the debt.

[Fightdebt]

It's a good point to negotiate if you are ever paying a debt collector, but you not only may redate a debt for reporting purposes, but also for lawsuit purposes - you could make it easier for them to sue you. So partial payments may not be a good idea unless you're sure you can go all the way through with the deal. And remember too that anything you say or do can be used in a lawsuit against you. Silence is often golden!

[luminor]

You cant beat the feeling of being debt free.

[ashleydupree]

Fuck credit, and the scores that tell society if you are a good person or not.  I don't use or need credit cards or loans.  I can just as easy save up for something I want.

[bryandonovanjr.]

i think youre misunderstanding who his intended audience is. he's definitely not advising people not to pay their mortgages. i dont believe he's speaking to the people who have recently created debt, as that would not be in collections yet and is still reversible. i think he's speaking to those who have debt in collections. from personal experience, you should NOT pay. when i was 18 i fucked up my credit instantly.. my 7 years just came and to my shock my score jumped from 540 to 710

[anthonyhernandez]

The original delinquency date is the date your collections will fall off doesn't matter whether you pay them or not. It will reset the statue of limitations depending on your state. If your past the statue of limitations in your state with a certain debt. Unless your trying to buy a home, I would let the collections company know and also let them know not to contact you, certified mail. I have some personal experience from back on the day plus a reminder that Experian wrote in one of their articles.

[etree]

If you do pay off a collection account make sure to prearrange a DELETION LETTER first. All collection agents work on commission and they want to collect on an account to get paid. If they are not willing to delete tell them you will let is sit. Call back a few weeks later, but only pay if they in return will delete the degro. all together. That is the only way you pay a collection account off and that can help to increase your score.

[castawayds]

Collection Agencies BUY YOUR DEBT.
That means you no longer owe anything to ANYBODY!
Isn't that nice of them?  Now go spend your money and have lots of fun with them on the phone when they try to collect over a debt that they bought and you are in no contract with them to give them shit.  Well, you can give them shit if you want, In fact enjoy keeping them tied up on the phone as long as possible that way they're not making any commission or harassing anybody else.  Have fun and congratulations on not owing your debt anymore!

[VinDcator]

I have said it time and again, don't pay!  Live with your mistake, save your money, and move on.  Paying won't help.

[JamesJohnson-zbyg]

back in 1700 1800 you do not pay debt you went to jail

[sleepwalker]

I sent in a payment to pay off a credit card one time, and they held the check for 2 weeks, and charged late fees, etc to keep account open. Then they filed on my credit saying i owned $300 in interest. No i did not. Another time a appartment manager used a illegal lease agreement and I left before the fake lease was up, and they sold my debt and a 3rd party filed on my credit saying i owed the rest of the lease, but Im a realtor for 18 years, the manager was also required by the state to have a real estate license like me, and so does the 3rd party collector, need a real estate license to collect real estate fees in each state, and out of state bill collectors are not licensed. . So whole lease was VOIDABLE and me the licensed realtor Voided it out. So there are cases when people do not owe money. Everyone does not owe.

[SocialLocust]

If your debt gets sent to a collections agency without your consent, then your contact has been sold illegally and you do not owe them anything.

[AcousticFiend]

still showing on your credit, but now it shows up as a collection account that has been paid in full. I don't know much about credit scores, but i'm willing to be that a paid in full collection account scores better on your credit than an outstanding collection account. That's how it really works. This video makes it seem like paying a collection account is going to make it stay on your credit longer when in reality it was already there and will remain for the same amount of time.

[tournettn]

I wish I had known this before. I actually went through and payed what bad debt I had, off. My credit score went down 3 points. I couldn't believe it. So now whatever is out there will just stay out there.