Pay-For-Delete Letter: What It Is And How To Write One

If you go through a rough time, you can often get back on track. But debt tends to follow you for a while if you’ve had something go to collections. Even if you can pay off or settle your debt now, a pay-for-delete letter may be the only way to remove it from your credit report in the short term.

What Is A Pay-For-Delete Letter?

If you’re looking to remove collections accounts from your credit report, you will need to make a request. These don’t tend to go away when paid in full or settled. To do that, you’ll have to send a pay-for-delete letter. The idea here is that you agree to settle the debt or pay it off in full in exchange for the creditor deleting the collection item from your credit report.

Most collections accounts remain on your credit report for 7 years, even when paid off. The timeline may be different in certain states. Medical debt gets removed a year after delinquency and is immediately taken off when paid in full. For other types of debt, you’ll need to negotiate with the debt collection agency to have the collections item removed.

Pay For Delete Vs. Paid In Full

A key point to understand is that even if they’ve been paid in full, collections accounts still remain on your credit report for 7 years outside medical debt. Something going to collections can act as a signal to potential future creditors that you’ve had trouble making your payments in the past.

According to Experian™, models older than FICO^® Score 9 and VantageScore^® 3.0 don’t distinguish between collections that are just sitting out there unpaid and ones that have been paid in full. This means that depending on the model lenders are using, it may not make any difference that the collection has been paid off unless you get it removed from the report.

As an example of the impact of this, the Federal Housing Finance Agency is requiring mortgage investors to switch to FICO^® 10T and VantageScore^® 4.0 models by the end of 2025. However, currently, the major mortgage investors report older versions of the models which don’t account for paid-in-full collections.

Pros And Cons Of Pay For Delete

How To Write A Pay-For-Delete Letter

If you’re considering a pay-for-delete letter, here’s some guidance on how to write one.

Pay-For-Delete Letter Template

An example pay-for-delete letter that you can fill in with your details is below:

[Your Name]

[Your Address]

[City, State and ZIP]

[Name of Creditor/Collection Agency]

[Creditor/Collection Agency Address]

[Creditor/Collection Agency City, State and ZIP]

[Date]

Re: Account Number [0123456789]

Dear [Creditor/Collection Agency Name]

I’m writing you regarding your recent letter about account number [0123456789]. I’m willing to settle my debt with you in the amount listed below provided you accept the following terms:

Your acceptance of this payment shall release me from further responsibility for the debt.

You agree not to mark the debt as a “paid collection, “settled account,” or “paid as agreed.”

You will remove any and all references to this collection account from any credit reporting agencies (including but not limited to, Equifax^®, Experian^™ and TransUnion^®) to which you have validated the debt.

In exchange for your cooperation, I’m willing to pay [the full balance/$XXX to settle this matter]. No promise is being made to pay other than under the terms of this agreement. If you haven’t responded within [X] days, I’ll assume you’ve rejected the offer and rescind it.

If you accept, please send a letter back signed by an authorized representative under your letterhead. Once received, I will pay [$XXXX] by [cashier’s check/money order/wire transfer].

I appreciate your time and attention in this matter and look forward to your response.

Sincerely,

[Your signature]

[Your name]

Tips For Writing A Pay-For-Delete Letter

Before you write your pay-for-delete letter, we recommend doing all of the following:

Make sure the debt is real. There are numerous debt collector scams out there. If the “collection agency” you’re talking to is referencing debt that you don’t recognize or that you know is either current or long since retired, your antennae should go up. Politely tell them to send you a letter. Any legitimate collection attempt requires you to be given response time. Even if you’re unsure, this buys you time to contact the original creditor directly and verify the status of your account.

Wait for the debt validation letter. Debt collectors are required to give you all the information about your debt and your options for dealing with or disputing it. This will typically be in the form of a debt validation letter. You’ll also have exactly how much you owe in writing before doing anything by waiting.

Do your research on the collector. You should know whether the collection agency is reaching out on behalf of your original creditor or if they’ve bought the debt from the original creditor. If the debt has been purchased, it’s typically bought for something less than the original amount owed. Because of this, they may be more likely to settle with you for less than what you owe, but more than what they paid.

Understand your leverage. In some cases, state law imposes a time limit on how long collectors have to actually collect. If the time limit in your jurisdiction is near, the creditor may be willing to remove the collection from your report in exchange for a smaller payment.

What If Your Pay-For-Delete Letter Is Rejected?

It’s important to note that your creditor doesn’t have to take the deal offered in your pay-for-delete letter. If they don’t, there are a couple of options for you:

• You can pay off the debt in full or settle it anyway. Depending on the credit scoring model in use by the credit bureaus at the time, collections that are paid off or settle may help boost your credit score.
• You can wait for the collection to fall off your report. This is admittedly not quick, but you wouldn’t have to do anything and you don’t have to set aside money you may or may not have.

Pay-For-Delete Letter FAQs

Let’s finish our discussion with some other questions you may have.

Is there a statute of limitations on debt?

Many states have laws that limit the ability of debt collectors to collect beyond a given time frame, usually 3 – 6 years, but sometimes longer. The time frame may also vary based on the type of debt. The state law might be listed in your agreement.

Are there consequences of using a pay-for-delete letter?

The worst they can do is say no. One caution with this approach is that if you have multiple collections, the payoffs could be expensive to budget for.

Does a pay-for-delete letter increase my credit score?

If your creditor agrees to the terms of your pay-for-delete letter, it should improve your credit score because the collections account will disappear from your credit report. This would boost your score in short order.

Can a pay-for-delete letter erase bad credit overnight?

There’s no such thing as an overnight quick fix. Assuming your creditor deletes the collection, credit bureaus still only report your score to one of various services every 30 days. So it can take some time before you see the results.

The Bottom Line

A pay-for-delete letter involves negotiating with a creditor or collection agency on the terms that you will give them payment for your debt in exchange for the deletion of the collection. You may be able to repair your credit faster or settle for something less than what you owe. On the other hand, creditors don’t have to accept the deal. Make sure the debt is validated in writing.

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