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what's happened in subscribers welcome back to the cash flow er community it's so nice to see it here on the channel oh man we're on a mission to hit a hundred thousand just around the bend I can't wait I don't know why that's such a big goal but I'm very excited about it and I want to thank you guys for joining the community if you haven't yet subscribed consider doing so not only are you gonna receive some of the best tips tricks little-known secrets of how to bank and borrow the right way how to actually manage your money the right way how to have a lot less debt how to have access to a lot more money how to have access to perfect credit but as a subscriber and an active participant here on the channel you can remain eligible to win things like this this $25.00 amazon gift card which is going to be given away here on today's episode so stay tuned for that now today what we're gonna talk about our collections got a few points I want to make on this there are other details that we've discussed in other videos and will continue to discuss in future videos but very important little trick that just recently happened with a coaching member her name is Leslie and it can happen to absolutely anybody so before you go clicking off of this video thinking this topic doesn't apply to me because I'm the perfect borrower and I paid on time every time this can happen to you and it can also destroy years of opportunity for you so let's talk a little bit about collections now first of all for those of you who are unaware collection accounts are purchased for pennies on the dollar so obviously you've got your primary creditor the the person you've been making payments to something happens where you're unable to make a payment and they then turn around write the collection off as a charge off where they then obviously receive tax benefits from that and they put it on the open market where that account is then sold so the highest bidder will then win the account and they might spend 5 10 15 20 cents on every dollar that you owe and it's obviously then up to that collection agency to come after you for the money and anything above what they paid for it that they're able to collect is a profit to them once the collection agency has this account it's going to start reporting on your credit report as a derogatory and it'll have an outstanding balance now to give you a little background on myself back in 2000 we launched VIP as a wholesale residential mortgage company and it was actually under the name America's mortgage and VIP financial education was teaching classes alongside America's mortgage and people that would come to our classes what often times want a home loan and this was in the heart of the refinance boom which was a crazy crazy experience to be involved with we really focused more on conventional lending a paper borrowers so I didn't really dip my toes much into the subprime lending world but obviously we were super aware of everything that was going on not big believers or subscribers to what was taking place and for obvious reasons one thing that we learned was that new lenders are not interested in lending if you have an outstanding balance to really anybody any past due balance that you owe whether it be a collection or to one of your existing first party creditors you know those accounts are generally gonna have to be paid or caught up that past due amount will be what will need to be caught up before you're able to qualify for new money that seems fair right I mean look you wouldn't want to lend to somebody if they owed somebody else money and weren't paying on time so a lot of borrowers are tempted to go out and just simply pay this loan and what we began learning early on was that by doing so it would actually cause harm to credit and that seemed unexpected surprising not only we were the borrower's alarmed and when this happened but we were caught by surprise and this was shortly before we actually hired some of the pioneers of the credit industry to mentor us so we've been through many many different coaching programs ourselves as well and one of those coaching programs was with one of the original creators of the first FICO credit scoring algorithm and what we've learned at that time was that the date of last activity that shows up on your credit report with each and every trade line including collection accounts is updated upon a payment or full payment being made so if you make a partial or a full payment the date of last activity associated with that account will become current which then means that you have a current brand-new collection account associated with your credit versus a collection account that had been seasoned for however long since the latest activity took place which could have been even years so as years go by seasoning is established and all of a sudden the impact of that collection account is is affecting you less and less in fact once you hit a 36-month and beyond seasoning point most of the time the impact to your credit scores is minimal at best if it's still having a large impact on your credit score credit doesn't have enough depth to it so if you were to go in and after one to three years pay that account and it becomes updated suddenly your scores plummet and the likelihood of you being able to qualify for that new loan becomes less likely as well so it's almost a catch-22 so what is one of the you know key solutions here well first of all I would only negotiate a settlement of this account upon removal of the account so what you do is you contact the creditor directly and you're not there to try and and create conflict we've learned that statistically you're much better off trying to earn an empathetic friend on the other end of the phone and just understand that most of the time these call centers are massive with lots and lots of individuals that are earning very little money and they have a tough job I mean imagine buying an account for pennies on the dollar of what's owed for that account and then being the low-wage employee that has to pick up the phone and start harassing people harassing friends and family and employers and while there are laws to protect against that sort of thing a lot of these companies break those laws and you know it's up to the employees to kind of follow through on on the direction of their employer so with that in mind you can experience a lot of this and and sometimes these employees are a bit on the defense so if you go in there on the attack because you're offended and you obviously are frustrated about this it won't likely get you where you want to end up in fact we've even been hung up on in the past so while the aggressive approach is something that we certainly are more tempted to take the more passive you know emotional approach seems to work a little bit better so what you want to do is call and it's not about giving sob stories what we've learned is that if you can at least set the implication that there's a potential that you're gonna consider filing bankruptcy and here's how you'll consider filing bankruptcy all right not easy to consider while it's easy but certainly not fun to consider but now that I've considered it I can contact that creditor and explain that look and let's go ahead and just do a quick roleplay here we'll do it with this $25 Amazon gift card yes hello my name is Matthew pull more and it looks like I have an account with you guys that I'm unfamiliar with I just ran a credit report and I'm in the process right now of trying to get my finances in order because up till now I have considered bankruptcy which I would really really rather prefer avoiding however given the way that things are going I'm not sure if I'm going to be able to and a lot of it rides on the outcome of our conversation so I'm hopeful that you might be able to help me out with this account because I want to do whatever is possible in order to to get this this account removed for my report as it stands right now this account is destroying my credit and if I'm unable to to have a positive impact on my credit by way of negotiating a payment with you guys then it it might make better sense for me to consider a bankruptcy and so what I'm hopeful for is that I can speak with somebody that would have the decision-making ability to remove this account if I'm able to if we can come up with a payment that works for you guys is that something that you would be open to considering all right now chances are you're gonna get somebody that'll say no doesn't mean that that's where the buck stops you could actually ask to speak with a supervisor which I would recommend you do if that supervisor is also unresponsive to that conversation that it might make sense for you to hang up the phone and and call again in a day or two days and just see if you can get somebody different again most of the time these call centers have a lot of people working there so it's just a matter of getting somebody that's having a great day and wants to help you out on the other end of the phone now here is priority number one negotiating for removal you want the account to be removed it's not good enough to have them just simply update the account with a zero balance the balance is not what is affecting the score it's the negative reporting of the derogatory account the collection account it can have a zero balance and still be negatively affecting you so number one priority is getting the account removed from the report the way that you best go about having that happen with a ninety nine point plus accuracy percentage is you're getting a letter from the creditor from the collection agency on their letterhead and signed by some form of a manager that states that that account was reported in error and should be removed from the credit report the account numbers need to match from the letterhead to the credit report so make sure that that's a part of the conversation if you end up with somebody on the other end of the phone that's receptive to this the second thing that you want to look at as a priority is potentially paying less for that account than what's actually owed again the angle that we're coming in with on this conversation is we are scratching together every single last penny nickel dime and quarter out of the couch cushions to make this happen we're gonna be contacting family we're gonna be contacting friends to see just how much we can come up with in order to get this account paid in full but what would be the absolute minimum that you guys would be willing to accept and still agree to remove the account from from my credit report again I'm gonna approach everybody I know that might be willing to help me with this I don't know for sure if it's going to be successful but what is the minimum you'd be willing to take if I could get you know that dollar amount together within the next couple of days now keep in mind if you do get a creditor that's willing to settle for less than the full balance or that's even willing to take the full payment in exchange for removing the account they're usually going to require you to pay in full within days or just a couple of weeks and they'll they'll put a firm deadline on that if you do not meet that payment by the deadline usually it cancels out any negotiated terms that you guys had verbally agree to so do not agree to pay the collection account if they are unwilling to remove it from your credit report at that point it will make better sense for you to explore every possible option that you have including possibly hiring a credit repair company credit restoration company somebody that has a professional track record of highly reputable account deletions now if the account technically belongs to you and it's not erroneous attacking that account for removal and arguing that it is in fact not your account is a violation of terms of credit repair so you've got to be very careful about how you go about doing this but do not pay a collection account if one happens to show up and I'll give you the most common set of circumstances which is exactly what happened to our friend Leslie the coaching member that just recently successfully negotiated for her collection agency to remove an erroneous medical collection that had been reported as a result of her health insurance company not paying the medical bill in time and that is something that we have seen time and time again for the last almost 20 years is people showing up with an unexpected bill on their on their credit report a collection account that happens as a result of an insurance company delaying payment because of all the red tape that happens through the processing through your policy so guys I hope this has helped you if you want us to continue to do topics around derogatory Zoar negatively influential types of credit circumstances please go ahead and drop a like on this video I know it goes a little bit outside of our typical demographic most of the people that find this channel the most beneficial are people that are already doing very well with their finances we consider our channel to be the the 202 version of Dave Ramsey it's a bit of a combination of Robert Kiyosaki's Rich Dad philosophies and Dave Ramsey's more conservative approach to money management so it's all about being fiscally responsible but also being creatively aggressive while not taking unnecessary Darry risks it's all about safely getting the upper hand on the banks and one of our longtime subscribers Kaley is this week's champion $25 Amazon gift card we give these out every single week we're going to be giving them out all the way till October we're also giving away 1/2 hour Skype phone coaching session with yours truly that is happening one time per month so make sure that you read the eligibility requirements below in the description and finally if you have not yet had your free coaching session that we offer to everybody 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that and this is made us Millions and right now we're earning over six figures every single month in profit by utilizing these techniques that are taught here on this channel or if that sounds exciting to you if you want to understand how to get the best of the bank's if you want to see how to pay off all your debt this is the channel thank you so much for tuning in congratulations Kaley thank you so so much for your viewership and to all of you we'll see on the next video until then make it a great day and take care [Music]