Sometimes you just want to get something done and over with. Some people can’t be bothered to manually dispute records on their credit report and would prefer pay for the option to delete a record from their report.
There is a way to do just that. Naturally, this method is called the “pay for delete.”
Pay for Delete: A Tradeoff
Collection agencies make a handsome profit buying bad debt and hoping to collect on it. Studies suggest that collection agencies pay as little as $.10 on the dollar for recently unpaid debts. After the debts age to one-year or older, a collection agency might pay as little as $.01 on the dollar.
Thus, collection agencies are willing to negotiate. By arranging a pay for delete, you can offer a partial debt payment in order to get a particular item off your credit report.
Collection agencies are in the business of making money. That doesn’t mean they have to make it all from you.
Ideally, you’d know when a collection agency purchased your bad debt and how much they paid for it. In reality, it’s rare to know when a collection agency bought a debt, and no collection agency will tell you how much they paid for your obligation. We suggest to just round it off and stick to paying no more than 20% of the amount owed. If you owe them $1,000, make a deal to pay for delete for a payment of $200.
You both win.
- You get a collection agency record off your credit report for a fraction of the full amount owed.
- The collection agency makes a profit on the transaction.
How to Request a Pay for Delete
Here is a step-by-step approach to requesting a pay for delete agreement with a collection agency:
- Write the agency with an offer to make a full or partial payment on the balance of the debt. Be sure to note that the collection company did not validate the debt, or provide documentation that it is yours. Also, note that you would much prefer to settle rather than hire an attorney to sue them for the debt. This is a business agreement – you’re tired of their false allegations and they’re tired of waiting for a payment. Act like you’re ready to make a deal.
- Include a settlement offer with the letter. There are a few websites that provide a free settlement offer template. Our lawyers won’t let us.
- Wait for a response. The collection agency should provide a written letter accepting your settlement offer to proceed. The letter should be signed by a representative of the firm.
- Pay for the delete. After you have written proof of their acceptance, you should send a money order to pay for the outstanding amount. We do not recommend sending a check, which contains personal information as well as your checking account number. Simply send a money order and call it done.
The pay for delete agreement is a great way to make quick work on your credit report. Most collection agencies will happily take a settlement of 20-50% of the amount reported outstanding – even if they have to stop reporting the debt to the credit bureaus. Also, you save plenty of time in that you won’t have to dispute claims on your credit report, nor monitor your credit report for resurfacing problems.
When to Avoid a Pay for Delete
Pay for delete requests can start as much trouble as they can stop. A pay for delete is essentially an agreement to settle the debt – without the courts – and with specific additional requests (stop reporting the debt to credit bureaus).
A pay for delete can stir up more trouble than it’s worth. In cases where a collections agency is owed very large sums of money, a pay for delete request may trigger the collections agency to restart efforts to collect on the account. Older accounts of smaller amounts (less than $2500) are more likely to settle.
Collections agencies in general have a willingness to settle old debts for a fractional payment. But don’t think that the original debt owner will be so willing to settle. If debts are being collected by the original owner, not a collection agency, it is likely that they’ll be slower to accept a partial payment. A pay for delete would then require a full payment of the balance due, or original outstanding balance less fees, interest, or charges.
Debt validation is a key step in verifying that a collection agency either owns your debt, or has been hired to collect on it. Do not skip the key step of validating a debt before offering a pay for delete.
Do not try to pay for delete on really big debts owned by the original owner. In this case, you’re more likely to find yourself on the other end of a lawsuit when the company gets a letter with your address and a hint from your letter that you have the cash to pay.
Debt Validation
Debt validation is a better alternative to pay for deletes when:
- You know the debt is absolutely not yours.
- The debt is larger, and thus even a partial payment isn’t a possibility.
- You refuse to pay if there are other options that don’t require a payment to debt collectors.
Continue reading to learn more about debt validation as an alternative or precursor to pay for delete requests.
Photo by: JD Hancock
