Your overall credit history is heavily impacted by multiple late payments, charge-offs, and any other negative marks. If you find yourself in a bad credit situation, it directly affects your ability to find the best credit card offers or any type of loan option, think house, or even a rental agreement.
There’s no doubt you’ll experience a feeling of relief when you pay off collections accounts. Whether it’s medical collections, defaulted student loans, credit card service providers, or any other debt collection agency, it is a negative item that’s probably been hanging over your head for a long time.
According to the FCRA (The Federal Credit Reporting Agency), you have the right to know every detail about your credit report from the credit bureaus: Experian, Transunion, or Equifax.
What Is A Pay For Delete Letter?
A pay for delete letter is a negotiation tool. It can help you remove negative collection account information from your credit history. Use the provided sample pay for delete template as a guide. You can use it to help you draft the letter you send to your debt collector in hopes of a debt settlement offer to remove the negative mark.
You have the option to make sure the debt collection agency has accurate information and request a debt validation letter within the first 30 days of contact. By law, the collection agency has to send a written explanation of what you owe and to prove you do in fact owe that amount. Once you’ve sent the letter and the collection agency sends their response, you can then send the pay for delete letter.
The feeling of debt relief could quickly give way to disappointment, especially if you learn that the derogatory information from that collection account is going to remain on your credit file for years to come.
If you settle a debt with a collection agency and the negative information remains on your credit report, you can use a pay for delete letter to attempt to have that information removed from your report. However, there’s no guarantee it will work.
As with most things in life, it’s well worth a try. There’s only the potential for upside and no downside. They tend to work well for medical debts and utility or cell phone bill disputes.
When you write a pay for delete letter, you are essentially asking a creditor to agree to remove the negative information from your credit report. They would do that once you pay the debt in full or settle for an agreed-upon amount.
Paid credit collection accounts are ignored by most new credit scoring models like VantageScore 3.0 or Fico 9.
How Does a Pay for Delete Letter Work?
A pay for delete letter is essentially your opening bid in a negotiation to settle a debt (and, ultimately, improve your credit score). When it works successfully, it’s usually because the collection agency determines that the amount you are offering to settle the debt is enough to motivate them to look for a reason to justify removing the record from the credit bureaus to which they had reported it.
It’s important to know that collection agencies don’t necessarily demand the outstanding balance to be paid in full. They typically purchase the outstanding debt from the original creditor.
They buy it for some small percentage of the balance due. That is with the hope that they’ll be able to recover at least a portion greater than the amount they paid for it.
If what you’re offering is less than what they paid the original creditor, they are probably going to be less likely to cooperate with you. If you offer the full amount of the outstanding debt, they are likely to be more receptive to working with you.
Note: If you’ve already paid the debt in full, but you’d like the account removed from your report, you’ll want to use a goodwill letter instead.
Don’t let reports that collection agencies would never accept the terms of a pay for delete letter frustrate you. It would be unlawful and unethical to provide inaccurate information to the credit bureaus.
The truth is the Fair Debt Collection Practices Act clearly states that there are several potential errors. There are technicalities that can justify the removal of accounts.
If a collection agency has a financial incentive to examine an account to look for any possible errors or technical issues that could justify removal, they are likely to take such action. There’s certainly no guarantee they’ll find anything.
However, anytime you can motivate them to take a look, you are increasing the odds of a favorable outcome. Therefore, it’s always worth a try.
Template: What Should I Include in a Pay for Delete Letter?
You should keep your pay for delete letter concise. Focus on the matter at hand.
Be specific with details relating to dates, turnaround times, payment amounts, and any other key negotiation points. But avoid providing too much unnecessary background information.
You want the collection agency to remove negative information from your credit report. The collection agency wants to turn a profit on the debt they purchased. There’s no sense in making it any more complicated than that.
The template below can help you get started with your own pay for delete letter.
<Your City, State Zip>
<Collection Agency’s Name>
<Collection Agency’s Address>
<Collection Agency’s City, State Zip>
Re: Account Number XXXX-XXXX-XXXX-XXXX
Dear Collection Specialist:
I am writing this letter in response to your recent correspondence related to the account number I referenced in the subject line above. I am considering the possibility of settling this debt.
I accept no responsibility for ownership of this debt. However, I’m willing to compromise. I can offer a significant settlement amount in exchange for the following:
- You agree, in writing, to designate the account as “payment in full” once you are in receipt of the agreed upon payment amount. The account will not be designated as a “paid collection” or “settled account.”
- You agree, in writing, to completely remove any and all references to this account from all credit bureaus to which you report.
I am willing to pay the <full balance owed / $XXX as settlement for this debt> in exchange for your agreement to remove all information regarding this debt from all credit reporting agencies to which you report within fifteen calendar days of receipt of payment.
When I am in receipt of a signed agreement with the aforementioned terms from an authorized representative on your company letterhead, I will pay $XXX via <cashier’s check/wire transfer/money order>.
If I do not receive your response to this offer within fifteen calendar days, I will rescind this offer and follow up with a method of verification letter.
Please forward your agreement to the address listed above at your earliest convenience, as I look forward to resolving this matter quickly.
You can also download a Word Document version of our template here:
You will want to keep a solid paper trail for possible use later on in the process. It is a good idea to send the letter via certified mail and request a return receipt.
What Should I Do if a Pay for Delete Letter is Rejected?
Unfortunately, a pay for delete letter is not always going to work. It’s always worth a try, and it’s great when it does result in deletion. However, sometimes collections agencies simply won’t see the value in complying with your proposed terms.
Your pay for delete letter may be rejected. If that happens, you still have several rights available to you under Fair Credit Reporting Act credit laws.
In the template letter I provided, I reference a method of verification letter. That is essentially exercising your right to demand verification of the debt. If you cannot produce the verification, the creditor must remove the record from your report.
A method of verification letter is a logical next step. That is because there’s always a chance they won’t have the relevant information they need to verify the debt. It’s also a good idea to reference it as a next step in the pay for delete letter.
That is because it’s a “polite” way of letting them know that they are going to have to do some work on this account one way or the other. Therefore, they might as well see if there’s a way to resolve it now. That way, there’s a chance they can receive compensation for it.
You can also negotiate a settlement without any conditions. The collectors will always be interested in taking your money.
That is the case especially if it yields them a profit on their purchased debt. It’s always better to have a settled account on your record than an unpaid account.
A settlement also opens the door to a “back channel” attempt to clear the account from your record. Once you have settled the debt, you can dispute the account with the credit bureaus. Then the collection agency may be less likely to verify the account with them since you have already paid them.
Who Can Help Me with a Pay for Delete Letter?
As we said earlier, a pay for delete letter is simply a negotiation tool. As is the case with any negotiation, you should carefully conceive and craft them to suit your specific situation. It’s important to note that in order to negotiate successfully, you must be well aware of what the other party wants out of the deal.
While it’s no secret what you want (a collection account removed and a better credit score), it’s not always so obvious what the collection agency wants. Of course, they want to collect money on the account they purchased from the original creditor, but how much of that debt are they willing to accept?
Most collection agencies only pay pennies on the dollar for an outstanding debt. If they collect even half the debt, they are probably turning a nice profit on the deal.
Like most people, you probably aren’t all that experienced in negotiating with collection agencies. When you consider the possibility of underplaying or overplaying your hand, it may make sense to procure the services of a reputable credit repair company.
Credit repair companies have professionals who know all about collection agencies, how they operate, what they respond to, and what strategies are best for various situations. They can help to improve your chances of a successful outcome, and might even save you money in the process.