Sample ‘Pay for Delete’ Letters

If you like debt collectors as much as us, you probably don’t want them existing in a 100-mile radius around your home.

Unfortunately, 91% of millennials say they’re barely paying their credit card bills. Coupled with the fact that collections agencies are thriving in today’s unforgiving economy, the situation doesn’t look promising.

Dealing with debt collectors is stressful, but there are ways to rid yourself of that stress. Sending a ‘Pay for Delete’ letter is one possible way of getting the collectors off your back – and saving your credit score in the process.

This is essentially a letter that says to the collections agency – “I’ll pay the full debt tomorrow if you remove the negative item from my credit report”. If you just pay the debt, the collection will stay on your report and drive down your credit for the next 7 years. But, if this letter works, you get rid of the debt, the bad credit, and the collectors in one fell swoop.

However, as is the case with most credit-related stuff, writing a pay for delete letter isn’t completely straightforward. There are a few very important details and legal expressions you must know first. 

In this article, we give you a pay for delete letter template you can basically re-write and use for yourself. You will very quickly learn how these letters work, what you should know before sending it, and what the alternatives are.

Let’s see how you can increase your credit with something as simple as a pay for delete letter. 

What is a ‘Pay for Delete’ Letter?

A pay for delete letter is a tool used to negotiate with a collection agency that owns your debt. If you owe them money and have a collection in your credit report, you can make a deal to get the collection removed – this will take care of your debt and improve your credit score.

These letters work sometimes and sometimes they don’t. However, there’s no downside to trying this. A pay for delete letter can only remove a collection from your credit report and let you pay off your debt at a lower cost – or it can do nothing if the collection agency doesn’t feel like negotiating.

How Does a ‘Pay for Delete’ Letter Work?

You send a letter to the collection agency that owns your debt. You tell them you will pay them $XXXX (your owed balance) if they remove the collection from your credit report. If they agree, you give them the money, and your credit report is clean – this can improve your credit rating significantly, based on how long overdue your debt was.

So basically, you agree to “pay” (your debt) if they agree to “delete” (the collection from your credit report). Hence the name.

Whether this will work or not depends on your collections agency. Collectors like money – that’s why they’re in the business – and if you offer to pay your debt off immediately, they might agree to this deal.

Note that these letters only work sometimes, although they are far more successful when it comes to removing medical debt and utility/phone bill collections. Most of the time, however, there’s just no guarantee a pay for delete letter will come through.

So, should you send this letter or not? Well, you probably should if you don’t mind the hassle. A pay for delete letter can work and it has zero downsides in most cases.

How to Write a ‘Pay for Delete’ Letter

A pay for delete letter should be very concise and contain only the necessary information. This means details about the owed balance, dates, payments, turnaround times, etc. No need to be wordy and eloquent – just clear and precise.

The collection agency just wants to make a profit on you – tell them how they can do that and what you expect in return. Here is an example of a pay for delete letter. Hopefully, you can copy this letter in its entirety and just replace the placeholder text (bolded) with your data.

Pay for Delete Letter Template

John Smith
123 Anystreet, Anytown, NY 12345, 555-XXX-XXXX, john.smith@anymail.com

September 1, 2020

Bob Bobson
Collection manager

Anytown Collectors
321 Main Street
Anytown, NY 12345

Account number – 1111-2222-3333-1312

Dear Mr. Bobson,

This is a response to your [ call / letter / credit report entry] on [date] related to my debt. I have a settlement proposal that can save us both a lot of time.

Please, keep in mind that I don’t acknowledge I owe any debt, as I have not received any verification of the debt. Also, this is not a promise to pay and is not an agreement to pay unless you provide the response as explained below.

I am aware your company can report this debt to the credit bureaus as it sees fit. Also, I am aware you can change the listing since you are the provider of the information.

I am willing to pay [ This debt in full / $XXXX in settlement for the debt ] if you agree to remove all the information concerning this debt from the credit reporting bureaus within the next 10 calendar days. If you agree to this proposal, I will send a certified payment equaling $XXXX to Anytown Collectors in exchange for the removal of all information concerning my debt from all of my credit files.

If you agree to this you also agree not to discuss this proposal with any third party, excluding my original creditor. If you agree, please send an official letter from your company agreeing on the terms. The letter has to be signed by an authorized agent of Anytown Collectors. The letter will be treated as a contract and will be subject to the laws of my state, [State name].

According to the Fair Debt Collection Practices Act, I retain the right to dispute this alleged debt. If I don’t receive an official answer in the next 15 days, I will withdraw this proposal and request the complete verification of this debt.

Please send your agreement to the address listed above.

Sincerely,
John Smith

👀 Things to Keep an Eye On

This letter is pretty straightforward, but it’s still a legal document. As is often the case with legal documents, even the smallest detail can change the meaning of the letter. Here are a few things you should pay attention to when writing a pay for delete letter.

• Don’t acknowledge you owe any debt – This might seem weird, but you should say you don’t acknowledge having any debt right off the bat. This allows you to ask for debt verification in the future, which can come in handy.
  
  Collectors have to work and gather documents to be able to verify the debt is your. To spare themselves the hassle, they might just agree to your proposal.
  
• Request an official answer – Make sure the response you get is signed by an authorized collector from the company. This will make the document an official legal document.

‘Pay for Delete Letter’ Tips 

1. Ask for debt verification – The collectors must be able to prove that your debt is really yours – if they can’t, then you don’t have to pay anything. On the off chance they can’t verify your debt, you can get off the hook without paying anything, so it’s worth a try. You can only do this within 30 days of your first contact with the collections agency.
   
2. Check if the debt is still on your report – Different collections agencies have different company policies. Some will delete the collection from your report and maybe you didn’t even get one in the first place. It’s best to check your credit report and see if anything needs fixing before you do anything else.
   
3. Make sure you have the money on the ready – If the deal offered via the pay for delete letter goes through, you will most likely have 48 hours to pay the collections agency in full. If you are late with your payment here, the deal will fail and you will be back where you started.
   
4. Send letters and the payment via certified mail – You need legal proof that you sent the letter and the payment. Make sure you send everything via certified mail and keep the return receipt.
   
5. Keep a copy of the letter –  If it works once, it might work again. Keep the letter you sent so you can adjust it later and send it to other collectors if need be.

What if My ‘Pay for Delete’ Letter Gets Rejected?

There’s no guarantee a pay for delete letter will work – more often than not, these proposals get rejected by collectors.

Although the collectors might have the financial incentive to accept your settlement, they are in no obligation to do so. Here are a few things you can do if your request is rejected.

• Pay off the debt anyway – If you’ve got the money, it might be a good idea to pay off the debt immediately. This means you will lose the leverage you have in negotiation with the collectors, but since your offer has already been rejected, it doesn’t matter. Getting rid of the debt will lift a huge weight off your shoulders, and that’s what matters the most.

• Wait for the next opportunity – Your debt will most likely be moved to another collector in 6 months (although this isn’t always the case). Then, send a pay for delete letter to the new collector.

• Pay nothing and wait – You can postpone payment and wait for the reporting limit of the collection expires. This has serious downsides, as collectors will harass you with phone calls and letters – also, you will get sued eventually.

• Alternatively, send a settlement letter – This is very similar to a pay for delete letter with one twist – you request to pay less. This means you offer to pay a part of the debt back in full and ask for forgiveness on the rest of the debt. This has even less chance of working and will not remove the negative item from your credit report but you can end up paying less.

Why ‘Pay for Delete’ Might Not be Worth It

Aside from the obvious drawback that there’s no guarantee of success, there are other reasons why a pay for delete letter might not be worth the hassle. Simply put, the pay for delete practice is becoming outdated.

Some newer credit scoring models like FICO 9 and VantageScore 3.0 don’t like it when you remove your collections this way. A collection removed via pay for delete letter will actually hurt your score in these scoring models.

Essentially, pay for delete is considered a slight shady practice, which is why creditors don’t like it. In this case, it’s better to just pay off your debt, leave the collection in your credit report, and wait for 7 years until it is removed from your report. The credit bureaus often fail to remove negative items, though, which is why you might have to remove the errors from your report yourself.

However there’s a catch – most lenders and creditors still use old credit scoring models. This means they won’t notice the removed collection and your credit will be much higher in their eyes. But this doesn’t apply to mortgage lenders – they will see all removed collections. Therefore, a pay for delete letter won’t help you get a mortgage loan.

How to Keep Your Credit Healthy During COVID-19

In this unprecedented era of unemployment and reliance on credit, it’s probably more important than ever to maintain a high credit rating. Studies have shown that 33% of Americans have been making bad financial decisions that damage their credit. 

This is in part due to panic and in part due to heavy dependence on credit cards – both are very understandable. The overall drop in credit scores combined with tightened lending requirements has made things like getting a mortgage loan with bad credit very difficult.

Needless to say, it is best if your credit stays where it is or even improves in the following months. The credit bureaus, lenders, and even the government have stepped in to make credit maintenance possible for the average borrower.

Here are a few things you should keep in mind if you want to build your credit in today’s chaotic environment.

1. Check your credit report – First, you must know what’s going on. If you know how to read your credit report, it will show you exactly what’s hurting your credit score and what you can do to fix it. You can get your credit score from all 3 credit bureaus on www.annualcreditreport.com.

2. Speak to your lenders – Most lenders and creditors nowadays will help you. It has become common practice for lenders to give borrowers better terms and allow them to skip payments. Contact your lenders if this is the relief you’re looking for.

3. Pay the minimums – Paying the minimums on all your bills is far more important than overpaying some of them. Missed payments are what drives credit down the most, so make sure you at least pay the minimum amount for all your bills.

4. Contact your utility service providers – If your utilities or phone bills are too hard to handle, contact your service providers. They have also gotten into the habit of giving users beneficial payment options.

5. Beware of identity theft – If cybercriminals get a hold of your personal data, they can open lines of credit in your name and spend the money for themselves. This can obliterate your credit score, but luckily, there are a few ways to protect yourself.
You can either freeze your credit or get one of the top credit monitoring services to safeguard and insure you against identity theft.

6. Consolidate debt – Debt consolidation means combining multiple debts into a single one with favorable terms. Managing one debt is very easy while managing 4 or 5 is a real nuisance – which is why debt consolidation is a recommended course of action. Since interest rates are low right now, getting a top debt consolidation loan even with bad credit, might be a good idea.

7. Budgeting is key – If you’re already writing down your expenses and planning ahead, kudos to you. If not, you might want to consider budgeting. For example, if you encounter a medical emergency, you will probably need to borrow money. By planning ahead and building an emergency fund, you can prevent such situations from ruining your credit.

How do You Ask for Goodwill Deletion?

A goodwill letter is a document that simply states – “I’ve paid my debt. Can you remove the negative item from my report, please?”. This letter might and might not work – it all depends on what the collectors/creditors want to do.

Should I Dispute a Collection?

If a collection is on your credit report for a reason, then you shouldn’t dispute it as it will not get removed. Some credit repair services claim they will swamp your collectors with requests until they give in and delete your collection. This is a shady business practice and will look very bad in other creditors’ eyes. 

If you think this debt isn’t yours, request debt verification from your collectors. If they cannot prove that the debt in question is yours, they are legally obliged to remove the collection from your report.

How Much Does a Collection Hurt Your Credit?

Collections and missed payments account for 30%-40% of your credit score, so it’s very important to avoid them. A collection can hurt your credit for up to 100 points depending on what other items are on your report. 

About the author

Tim Fries

LinkedIn Email

Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.