Pay for Delete Letter: Template & Guide to Remove Collections

A pay for delete letter is a negotiation tool that offers to pay a debt in collections in exchange for the creditor removing the negative entry from your credit report. This strategy can boost your credit score by eliminating collection accounts that drag down your score—particularly important if you're applying for a mortgage, where older FICO scoring models still penalize paid collections. However, success isn't guaranteed: creditors have no legal obligation to agree, and industry experts estimate success rates between 10-30%. This guide provides everything you need—templates, step-by-step instructions, and honest advice about when pay for delete makes sense versus when alternatives work better.

What Is a Pay for Delete Letter?

A pay for delete letter is a written proposal you send to a debt collector or creditor offering to settle a debt in exchange for complete removal of the collection account from your credit reports with all three bureaus—Experian, Equifax, and TransUnion.

Understanding how credit scores work helps explain why this matters. Collection accounts can remain on your credit report for seven years from the date of your first missed payment, even after you've paid them off. Under traditional scoring models like FICO 8, a paid collection still hurts your score.

Here's what pay for delete can and cannot do:

What it can do:

• Remove the collection account from your credit reports
• Potentially improve your credit score significantly
• Eliminate the negative mark faster than waiting for the 7-year drop-off

What it cannot do:

• Remove late payment history from the original creditor's account
• Force a collector to agree (they can simply refuse)
• Guarantee approval from all collectors

Is Pay for Delete Legal?

Yes, pay for delete is legal—but it exists in a gray area.

The Fair Credit Reporting Act (FCRA) requires creditors who report to bureaus to provide "accurate and complete information." Pay for delete technically asks a creditor to stop reporting information that is accurate.

However, here's the key distinction: creditors can legally choose NOT to report information. They just can't report inaccurate information. There's no law requiring creditors to report your debts to credit bureaus in the first place—reporting is voluntary.

The three major credit bureaus (Equifax, Experian, TransUnion) have policies discouraging pay for delete agreements with creditors. But enforcement is inconsistent, and many collectors—especially smaller agencies and debt buyers—still accept these arrangements.

Step-by-Step Process: How to Execute Pay for Delete

Step 1: Verify the Debt Is Legitimate

Before negotiating, confirm the debt is actually yours and the amount is accurate. Under the Fair Debt Collection Practices Act (FDCPA), you have the right to request debt validation within 30 days of first contact from a collector.

Learn how to read your credit report to identify collection accounts and verify the details match. Check for:

• Correct account number
• Accurate balance
• Proper original creditor name
• Whether the statute of limitations has expired

Step 2: Research the Collection Agency

Understanding who you're dealing with affects your strategy:

• Original creditors (banks, hospitals, credit card companies): Rarely agree to pay for delete. Low success rate.
• Third-party collection agencies collecting on behalf of the original creditor: Moderate success rate.
• Debt buyers who purchased the debt: Highest success rate—they bought your debt for 4-7 cents on the dollar and have more room to negotiate.

Step 3: Determine Your Offer Amount

Debt collectors often purchase debts at steep discounts. This gives you negotiating room:

Start low and be prepared to negotiate upward. Many collectors will accept 50-70% of the original balance, especially for older debts.

Step 4: Write Your Pay for Delete Letter

Your letter must include:

• Your name, address, and contact information
• Collection agency's name and address
• Your account number with them
• The balance being discussed
• Your proposed settlement amount
• Clear condition that payment depends on deletion from all three bureaus
• A deadline for response (30 days is reasonable)

See the templates section below for ready-to-use letters.

Step 5: Send Via Certified Mail

Always send your letter via certified mail with return receipt requested. This creates a paper trail proving the collector received your proposal. Keep copies of everything.

Step 6: Wait for Written Confirmation

The written agreement should explicitly state:

• The settlement amount they'll accept
• That they will delete (not just update) the account from all three bureaus
• A timeline for deletion (typically 30-45 days after payment)

Step 7: Make Payment Carefully

When you have written agreement in hand:

• Pay by cashier's check or money order
• Never provide your bank account information or agree to automatic withdrawals
• Keep your payment confirmation and the agreement together

Step 8: Follow Up and Verify Deletion

After 30-45 days, check your credit reports through AnnualCreditReport.com—the only federally authorized source for free credit reports. If the collection wasn't removed as agreed, dispute the error with the credit bureaus and include a copy of your pay for delete agreement.

Pay for Delete Letter Templates

Template 1: Standard Pay for Delete Letter

Use this template when offering to pay the full balance in exchange for deletion:

[Your Name]
[Your Address]
[City, State, ZIP]
[Date]

[Collection Agency Name]
[Agency Address]
[City, State, ZIP]

RE: Account Number: [Your Account Number]
Original Creditor: [Original Creditor Name]
Balance: $[Amount Owed]

To Whom It May Concern:

I am writing to propose a mutually beneficial arrangement regarding the above-referenced account.

I am prepared to pay $[Amount - Full Balance or Proposed Amount] in exchange for the complete removal of this account from my credit reports with Experian, Equifax, and TransUnion.

This offer is contingent upon receiving written confirmation from your company on official letterhead agreeing to:

1. Accept the payment of $[Amount] as settlement in full
2. Remove all references to this account from all three major credit bureaus within 30 days of payment
3. Not sell or transfer this debt to any other entity

Please respond within 30 days. If I do not receive a response, I will assume this offer has been declined.

I am committed to resolving this matter and appreciate your consideration of this proposal.

Sincerely,

[Your Signature]
[Your Printed Name]
[Phone Number]
[Email Address]

Template 2: Negotiated Settlement Pay for Delete Letter

Use this template when offering less than the full balance:

[Your Name]
[Your Address]
[City, State, ZIP]
[Date]

[Collection Agency Name]
[Agency Address]
[City, State, ZIP]

RE: Account Number: [Your Account Number]
Current Balance Claimed: $[Full Amount]

Dear Collections Manager:

I acknowledge there is a debt reported on my credit file associated with your agency. Due to financial constraints, I am unable to pay the full amount claimed.

I am offering to settle this debt for $[Your Offer - typically 40-60% of balance] as payment in full. In exchange, I request that your company:

1. Accept $[Your Offer Amount] as complete satisfaction of this debt
2. Remove this account entirely from my Experian, Equifax, and TransUnion credit reports
3. Report the account as deleted—NOT as "settled for less than owed"
4. Provide written confirmation of this agreement before I submit payment

This is not an acknowledgment that I owe this debt or a promise to pay outside of the terms above. Payment will only be made upon receipt of your written agreement on company letterhead.

Please respond in writing within 30 days.

Respectfully,

[Your Signature]
[Your Printed Name]

Template 3: Medical Debt Pay for Delete Letter

Use this template specifically for medical collection accounts:

[Your Name]
[Your Address]
[City, State, ZIP]
[Date]

[Medical Collection Agency Name]
[Agency Address]
[City, State, ZIP]

RE: Medical Account Number: [Your Account Number]
Original Provider: [Hospital/Doctor Name]
Date of Service: [Service Date]
Balance: $[Amount]

Dear Sir or Madam:

I am writing regarding a medical debt placed with your agency. As you may know, medical billing often involves complex insurance issues, and patients are frequently unaware of outstanding balances until they appear on credit reports.

I am prepared to pay $[Your Offer Amount] to resolve this matter completely. In exchange, I request written agreement that:

1. Upon receipt of payment, this account will be deleted from all three major credit bureaus (Experian, Equifax, TransUnion)
2. No further collection activity will occur
3. This debt will not be sold or transferred to another party

Please note: Recent changes by the three major credit bureaus have removed most medical collections under $500 from credit reports. Additionally, FICO 9 and FICO 10 scoring models do not penalize consumers for paid medical collections.

Given these industry changes, I believe deletion upon payment is a reasonable request. Please send your written agreement to the address above within 30 days.

Thank you for your consideration.

Sincerely,

[Your Signature]
[Your Printed Name]

Which FICO Scores Ignore Paid Collections?

This is critical information: whether pay for delete actually helps your score depends heavily on which scoring model your lender uses.

According to the CFPB, newer scoring models haven't seen widespread adoption yet: "There has been very little adoption so far, and the most widely-used models use the older, less accurate approach."

When Is Pay for Delete Worth It?

Pay for Delete Makes Sense When:

You're applying for a mortgage soon. Mortgage lenders use FICO versions 2, 4, and 5—which count paid collections. Even a 10-20 point improvement can mean thousands saved in interest over a 30-year loan.

You need quick credit improvement. If you're renting an apartment, getting a job that requires a credit check, or qualifying for specific credit products, removing a collection can help fast.

The debt is relatively small (under $2,000). Collectors prefer quick resolutions on smaller balances. Less potential profit means more willingness to negotiate.

You're dealing with third-party debt buyers. They purchased your debt cheaply and have profit margin for negotiation. They also tend to have less rigid corporate policies.

The debt is approaching the 7-year mark (5-6 years old). Collectors have limited time left to collect. They're motivated to accept lower amounts and may include deletion as part of the deal.

Pay for Delete Probably Isn't Worth It When:

Your lender uses newer scoring models. If applying for credit that uses FICO 9, FICO 10, or VantageScore 3.0+, paid collections are already ignored. Just paying the debt achieves the same score result.

The debt is very old (over 6 years). It will fall off your credit report soon anyway. Paying could potentially reset the statute of limitations in some states, creating legal exposure.

You're dealing with original creditors. Banks and credit card companies rarely agree to pay for delete. Their policies typically prohibit it.

The collection is from a major national agency. Large collectors like Midland Credit Management and Portfolio Recovery have strict corporate policies. Your request will likely be denied.

The debt isn't yours or contains errors. Dispute the errors for free instead. Don't pay money for something you don't legitimately owe.

You have multiple collections. One deletion may not significantly improve your score. Focus on overall credit improvement strategies instead.

Medical Debt: Special Rules You Should Know

Medical debt receives unique treatment in credit reporting due to recent major changes.

Credit Bureau Changes (2022-2023)

The three major bureaus implemented significant reforms:

1. Paid medical collections removed (July 2022): Any paid medical debt is now removed from credit reports entirely.

2. Extended reporting delay (July 2022): Medical debt won't appear on credit reports for one full year, up from 180 days. This gives you time to resolve insurance disputes.

3. Small medical debts excluded (April 2023): Medical collections under $500 are no longer reported at all.

According to CFPB research, these changes helped approximately 70% of people with medical collections on their reports. The CFPB found that medical debt is far less predictive of creditworthiness than other types of debt, with 58% of all collections on credit reports being medical bills.

CFPB Rulemaking in Progress

The CFPB has proposed new rules to remove medical bills from credit reports entirely. The proposed changes would prohibit medical debts on consumer credit reports and stop creditors from using medical collections in underwriting decisions.

Best Strategy for Medical Debt

1. Wait one year — the debt may never appear on your reports
2. Check if under $500 — automatically excluded
3. Verify insurance processing — many medical bills are actually billing errors
4. Request hospital financial assistance — nonprofit hospitals have charity care programs
5. Negotiate directly with the provider — before it reaches collections
6. Use pay for delete — only if you're applying for a mortgage and the debt is larger than $500

Alternatives to Pay for Delete

Before committing money to pay for delete, consider these free or lower-cost alternatives:

Goodwill Letters

A goodwill letter requests removal based on your positive payment history since the negative incident. Unlike pay for delete, goodwill letters work better with original creditors (not collection agencies) and are completely free to send.

Credit Report Disputes

If the collection has any inaccuracies—wrong balance, incorrect dates, or account number errors—you can dispute the errors through the credit bureaus for free. Under the FCRA, bureaus must investigate within 30 days and remove unverified information.

Wait for the 7-Year Drop-Off

Collections automatically disappear from your credit report seven years from the date of your first missed payment (not when it went to collections). For debts that are 5-6 years old, waiting may be smarter than paying.

Debt Validation Letter

Under the FDCPA, you can request debt validation within 30 days of first contact. If the collector can't prove the debt is valid and that they have the right to collect, they must stop reporting it.

Focus on Building Positive Credit

Sometimes the best strategy is adding positive information rather than removing negative. Improving your credit score through on-time payments (35% of your FICO score) and reducing credit utilization can offset collection damage over time.

Common Mistakes to Avoid

Paying Before Getting Written Agreement

Once you pay, you lose all leverage. Always secure written agreement on company letterhead before sending any money.

Acknowledging the Debt in Writing Too Early

Acknowledging a debt can restart the statute of limitations in some states. Request debt validation first and review the information carefully before responding.

Using Pay for Delete When Disputes Would Work

Disputes are free. If there are any errors in how the collection is reported, dispute first. You might get the collection removed without paying anything.

Not Sending Letters Via Certified Mail

Without proof of delivery, you have no evidence of your communication. Always use certified mail with return receipt requested.

Providing Bank Account Information

Risk of unauthorized withdrawals is real. Pay only by cashier's check or money order—never give direct access to your bank account.

Accepting Verbal Agreements

"We'll take care of it" over the phone means nothing. Only written agreements on official letterhead are enforceable.

Paying Old Debts Close to Falling Off

If a debt is 6+ years old, it will disappear from your credit report soon. Paying now, especially if it resets anything, may be counterproductive.

Not Understanding Which Score Your Lender Uses

Ask your lender directly which FICO version they use. If they use FICO 9 or newer, pay for delete may be unnecessary—simply paying the collection achieves the same score effect.

Frequently Asked Questions

Next Steps for Your Credit Journey

Pay for delete can be a powerful tool for the right situation—particularly if you're preparing for a mortgage and need to eliminate collection accounts from your credit reports. But it's not the only path to better credit.

Start by reviewing your complete credit profile. Know what negative items exist, understand which scoring models matter for your goals, and explore whether disputes or goodwill letters might achieve removal without payment.

For a comprehensive approach to credit health, explore our guides on understanding credit score basics, disputing credit report errors, and proven strategies to improve your credit score.