Pay for Delete — Method to Remove Collection From Your Credit Report
If you’re attempting to repair your credit and have some spare cash, the pay for delete method is the simplest approach to get collections removed from your credit report. For collections under $500, this is the best option. In essence, you will agree to pay the full amount owing in exchange for removing the collection from your credit report.
Even if you’re in a financial bind, most individuals can afford to pay a collection agency $500. If it’s more than $500, I still believe this is a great strategy. For debts exceeding $500, I recommend paying no more than 25% of the total amount outstanding.
To give you some context, most bad debt collection agencies pay or receive cents on the dollar for the debts they are attempting to collect. The amount that businesses pay for bad debt is determined by the account’s type and age.
Keeping this in mind, you should always begin your offer with a discount of 25% or less. Let’s have a look at the math. Let’s assume your debt is $1,000, and the collection agencies have paid or will pay you 7 cents on the dollar, or $70. Even if you gave them $250 (25 percent), they would still make a $180 profit. Keep in mind that credit card companies are no longer involved. This money is sent straight to collection agencies.
Why Should You Make Payments On Your Debt?
Removing a collection off your credit record might result in a significant rise in your credit score. Getting cheaper loans or credit cards can save you hundreds or thousands of dollars in interest. It’s worth the money to spend if you can get a collection erased.
How to Apply the Pay for Delete Method
On your credit report, look for the collection agency’s address.
First, send a debt validation letter to discover what information they’ve gathered on the account. A collection agency or a junk debt buyer will often have no paperwork on the account.
You will receive the following answer to your debt validation request based on your response:
If you don’t hear back from them by mail, give them a call to gauge their response. Calling a collection agency may be intimidating, and they can be plain hostile, impolite, and condescending. The agent’s responsiveness to a pay-for-delete offer is the most critical piece of information to obtain from them during this contact.
Even if they don’t seem interested, it’s good continuing this conversation. See if you can come to an agreement over the phone. Please don’t commit to any payments over the phone until you have that agreement in writing if you can acquire one.
If you receive documents from them in the mail, consider how much data they may have about you. It is not proof of anything if they sent you a computer printout. Only really solid paperwork (such as original creditor accounts, copies of canceled checks, or a bill of sale from the original creditor) should have an impact on the offer letter you’re going to send.
In a letter to the collection agency, offer to pay the whole amount (or whatever amount you think you can sell them for) in exchange for the account being closed. In the letter, there are a few things to keep in mind:
If this is the case, point out that they have not provided you with any documentation proving that the debt is yours or that they have the legal authority to collect it.
Tell them you’d rather pay the amount than take them to court for listing your debt on your credit report when they don’t have enough evidence to do so.
Present your offer as a commercial agreement, and remind them of the substantial profit they will be making if they accept it.
Keep in mind that you want the account to be completely removed from your credit record. It won’t enhance your credit score if the collection account is recorded as “paid” or “settled.”
A settlement offer should be attached.
The corporation has no legal need to reply to your pay-for-delete offer. Allow for at least 30 days for them to react.
If the collection agency or junk debt buyer does not respond, your only choice is to phone and inquire about your offer. Don’t put up with their insults; if you feel assaulted, hang up right away. Negotiate your desired deal with the representative. If you don’t receive what you want, gently request a supervisor’s attention.
Make no payments to the collection agency until you obtain a signed, formal acceptance of your offer from them. The signed document should be on collection agency letterhead and signed by an authorized individual within the company.
Send the collection agency a money order or cashier’s check for the amount you agreed to pay them after you have a formal, signed agreement.