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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

A pay for delete letter is a negotiation tool intended to get a negative item removed from your credit report. It entails asking a creditor to remove the negative information in exchange for paying the balance.

If you have a spotty credit history and you’re working to turn your finances around, you may be wondering how to remove negative items on your credit report. Late payments, charge-offs, credit inquiries and overdue account citations can all count against you.

There are, however, a few ways to potentially have past mistakes removed, one of which is a pay for delete letter.

What is a pay for delete letter?

A pay for delete letter is a negotiation tool intended to get negative information removed from your credit report. It’s most commonly used when a person still owes a balance on a negative account. Essentially, it entails asking a creditor to remove the negative information in exchange for paying the balance.

Even if you’ve gotten yourself out of debt and paid off collection accounts, without a pay for delete letter, negative credit items can remain on your credit bureau file for up to seven to 10 years.

Time heals all wounds—including credit mistakes—but if you can’t simply wait around for your credit to improve, you’ll want to consider taking some actions toward repairing your credit. Read on to learn when you should send a pay for delete letter, view sample templates and discover other credit repair options.

How a pay for delete letter works

An individual with debt writes a pay for delete letter to a collection agency with a request to remove negative information from their credit report in exchange for payment.

First, in order to understand how and why a pay for delete letter works, you’ll need some background on collection agencies.

Collection agencies are in the business of collecting debt. Some collection agencies are contracted to collect for a creditor and receive a percentage of what’s collected. Others buy the debt and seek collection as the “current creditor.”

Usually, a collection agency will only consider offering a pay for delete letter when you’re willing to pay more than it paid for the debt. There’s no magic number, but generally knowing what the other party wants gives you more information about what to include in your pay for delete letter. This increases your chances of succeeding in the negotiation.

Tips for sending a pay for delete letter

A pay for delete letter isn’t a magical fix. Not all creditors will accept pay for delete letters. Typically, many creditors like corporate banks, credit unions and even small-town banks may not be receptive to this strategy.

However, small utility bills, such as phone, cable and power bills, that go to collections are more likely to be accepted by creditors. Before you send a pay for delete letter, here are some tips to help you avoid common mistakes.

  • Consider the status of your credit reporting time limit. Is the debt several years old and about to expire? If so, a pay for delete letter isn’t necessary—the debt will no longer impact your credit score after the time limit has expired. If the credit reporting time limit is still far away, you may want to send a pay for delete letter. In addition, if you want to purchase a home or a car, the lender may require that the collection items are paid off, so you may want to send a pay for delete letter.
  • Verify your debt. Before making a pay for delete offer, it’s imperative that you’ve sent a debt validation letter within 30 days of initial contact with the debt collector and received verification of debt from them. In some cases, collectors could request payment even if your state’s statute of limitations on overdue accounts has run out.
  • Reassess your financial situation. If your pay for delete letter is approved, you often will only have a short window of time to make the payment. Only send one if you’re confident you can pay the agreed-upon amount.
  • Save details for your records. Before sending the letter, be sure to keep a copy for your records. Then when the recipient accepts your terms (hopefully), keep a copy for your records and include a copy with your payment. Also, try to utilize a method that you can verify shipping and delivery, such a “return receipt” or Registered Mail. In the event of any complications, you’ll be glad you did these things.

Pay for delete letter template

Your pay for delete letter doesn’t need to be long and complicated—or even full of legal jargon. Be sure to provide all the relevant information like dates, payment amounts and other details specific to your scenario.

The template below can help you write your own pay for delete letter. Simply update the bolded portions with your own information.

<Your Name>

<Your Address>

<Your City, State, Zip Code>

<Collection Agency’s Name>

<Collection Agency’s Address>

<Collection Agency’s City, State, Zip Code>

<Date>

Re: Account Number <XXXXXXXXXXX>

Dear <Creditor’s Name>,

I am writing this in response to your recent correspondence related to account number <XXXXXXXXXXX>.

I accept no responsibility for ownership of this debt; however, I’m willing to compromise. I can offer a settlement amount in exchange for your written agreement to the following terms:

  • You agree to accept this payment as satisfying the debt in full (once you receive the agreed-upon amount).
  • You agree to not list this debt as a “paid collection” or “settled account.”
  • You agree to completely remove any and all references to this account from the credit reporting agencies (Equifax, TransUnion and Experian) that you have reported to and validated this account.

I am willing to pay the <full balance owed / $XXX as settlement for this debt> in exchange for your agreement to the above terms within fifteen calendar days of receipt of payment. Understand that this is not a promise to pay. This is a restricted settlement offer and you must agree to the terms above in order for payment to be made.

Should you accept, please send a signed agreement with the aforementioned terms from an authorized representative on your company letterhead. Once I receive this, I will pay <$XXX> via <cashier’s check/money order/wire transfer>.

If I do not receive your response to this offer within fifteen calendar days, I will rescind this offer and it will no longer be valid.

I look forward to resolving this matter quickly.

Sincerely,

<Your Name>

<Your Address>

<Your City, State, Zip Code>

Sample letter to remove collection from credit report

Now that you have a template to write your own pay for delete letter, let’s take a look at a sample letter to make sure you’re fully set up for success.

What happens if a pay for delete letter is rejected

You should always be prepared for the event that the collection agency rejects (or ignores) your pay for delete letter. Not all agencies will see the value in agreeing to your terms or the practice of pay for delete letters as a whole.

It’s also worth noting that any acceptance of your offer must be made and returned to you in writing. In the event of a solely verbal agreement, you won’t have the ability to prove that an agreement was reached if the collector doesn’t follow through and remove the information from your credit report.

If your letter was rejected, there are still some other routes you can take to repair your credit.

Other ways to potentially have negative credit report entries removed:

  • Send a goodwill letter
  • Negotiate a settlement
  • Wait out the credit reporting time limit
  • Hire a professional

Common questions surrounding pay for delete letters

Pay for delete is a unique credit repair strategy, so it’s understandable if you have some lingering questions about it. Below, we address some of the most common ones.

Does pay for delete increase credit score?

Pay for delete can potentially increase your credit score if your negotiation is successful, but its impact largely depends on your overall credit profile. If you have several accounts in collections, your score is less likely to increase much from a single negative item being removed.

If you have a single account in collections, on the other hand, your chances of improving your score via pay for delete improve.

Which collection agency owns my debt?

If you’re unsure which collection agency is holding your debt, there are a few strategies you can use to try to learn more. Consider the following:

  • Check if you have any missed calls or voicemails from collection agencies
  • Ask your original creditor for help with tracking it down
  • Get your credit report and check the details surrounding your debt

Can I send a pay for delete letter to the original creditor instead of the collection agency?

You should send a pay for delete letter to the original creditor as long as they haven’t sold your debt to a collection agency. If the original creditor has already sold your debt to a collection agency, you can contact them to see if they are willing to reclaim your debt from collections; however, there’s no guarantee that they will agree to this proposal.

Is a pay for delete letter legal?

Sending a pay for delete letter is a legal way to negotiate to have negative items removed from your credit report. However, it’s important to note that creditors aren’t legally required to respond or accept the request. 

Oftentimes, creditors have contracts with the credit bureaus that prohibit them from removing accurate information from credit reports. If that’s the case, the creditor may not be able to enter into a pay for delete agreement with you.

Are pay for delete letters still common?

In recent years, pay for delete letters have become less common. This is partially because the latest credit scoring models, FICO® 9 and 10 and VantageScore® 3.0, do not take paid collection accounts into consideration when determining your credit score. There’s a chance these letters, even if approved, won’t impact your score at all.

Credit reporting agencies also discourage pay for delete efforts, strongly recommending that only inaccurate information be removed from reports. For these reasons, pay for delete is becoming a much less common practice.

That being said, if you’re in a more stable financial position now and expect collections activity to harm your credit, a pay for delete letter may be a good option for you to try DIY credit repair.

If you’re still not sure how to proceed or your pay for delete letter was rejected, consider equipping yourself with some personal finance tools and working with a credit consultant for a free credit report consultation.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Reviewed By

Nature Lewis

Associate Attorney

Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.

Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!

Source: lexingtonlaw.com

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Northwestern Mutual Receives Ninth Consecutive Score of 100% on Human Rights Campaign’s Corporate Equality Index Company earns the Equality 100 Award for LGBTQ+ workplace inclusion  MILWAUKEE, Dec. 6, 2023 /PRNewswire/ — Northwestern Mutual announced today that the company earned a 100% for the ninth consecutive year in the Human Rights Campaign Foundation’s (HRC) Corporate Equality … [Read more…]

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JOLTS, the job openings and labor turnover survey, used to be a very forgettable report.  On a scale of potential market movers, we’ve always assigned it the lowest possible rank.  But that changed over the past year and a half.  As the Fed and the market searched for signs that an ultra tight labor market might be loosening, job openings have emerged as a highly tradeable metric despite the fact that they run a full month behind nonfarm payrolls.  Today’s count came in at the lowest levels since mid-2021, when job openings were still in the process of surging to all-time highs.  Outright levels are still quite high, but definitely moving in the right direction as far as interest rates are concerned. 

Source: mortgagenewsdaily.com

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California-based Pennymac Financial Services’s broker division, Pennymac TPO, launched a home equity loan product as tappable home equity nears its 2022 peak.

“Pennymac’s broker partners can now offer their clients a home equity loan as a second lien solution to access more cash, while still preserving the low interest rate of their first mortgage,” the company said. 

A home equity loan — also known as a second mortgage — enables a homeowner to borrow money by leveraging equity in a home. The borrower receives the loan amount in one lump sum, which is paid back in monthly payments, typically for a term of up to 30 years.

The product is eligible only for primary residences with fixed-rate term structures of 10, 15, 20 or 30 years.

Currently available in 11 states, the minimum loan amount is $50,000 and the maximum is $500,000 with an 85% loan-to-value (LTV).

Pennymac’s home equity loan for brokers comes as U.S. homeowners sit on some $16.4 trillion of home equity in the third quarter of 2023. Tappable equity – the amount that can be accessed after retaining a 20% equity stake – stood at $10.6 trillion, nearing the peak in 2022, according to ICE Mortgage Technology‘s mortgage monitor report. 

While cash-out refinancing was a popular way to access accumulated home equity when mortgage rates were lower, that’s a lot less appealing with rates over 7%.

Even with higher levels of home equity, borrowers are more likely to take out a second-lien mortgage rather than lose a low rate on their first mortgage through a cash-out refi.

Pennymac reported a total of $19 billion in total acquisitions and originations to date in the fourth quarter, including $16.3 billion in correspondent acquisitions; $1.6 billion in broker direct originations; and $600 million in consumer direct originations, according to its latest 8-K filing with the U.S. Securities and Exchange Commission (SEC) on Monday.

Source: housingwire.com

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Combined into a series of federal, state and local laws, your specific renter’s rights get dictated by where you live. They’re in place to prevent things like housing discrimination and rent gouging. These basic rights ensure you have a safe, clean place to live as well as detailed courses of action when things are going wrong.

Landlord-tenant law helps you live peacefully in your rental. Do you know your tenant’s rights?

Fair housing

Before even taking a tour of a potential apartment, it’s your right to have fair access to housing. This means your rental application will not get rejected based on:

  • Race
  • Color
  • Religion
  • Age
  • Sex
  • National origin
  • Family status
  • Mental or physical disabilities

Your renter’s rights in this case receive protection at the federal level by the Fair Housing Act. State and local laws may reinforce the Fair Housing Act and even add more categories to this list to ensure everyone has equal access to apply for housing.

Not only can your rental application not get refused based on these factors, but, if you have a disability, landlord-tenant law requires they make reasonable accommodations for you to access the apartment. This could mean installing ramps or making a unit on a lower floor available.

Legal documentation

Another piece to your renter’s rights is the lease. It’s the responsibility of the property manager to give you a legal rental contract to sign that abides by all laws.

In addition to specifics about the property, and breakdowns for processes like requesting repairs, using common areas and more, a lease must clearly indicate the leasing period and your monthly rent. It should also have your name, and any roommates, on the document.

The lease should also include a series of general disclosures. The law requires these, although it varies by state which specific ones must get listed. A few common disclosures you may see in your lease if they’re applicable to the rental unit, include:

  • Notice of mold
  • Lead-based paint disclosure
  • Notice of sex offenders, recent deaths and any potential health or safety hazards

Living space

A variety of rules govern your living space when you’re a renter. This ensures you have somewhere to live that’s actually livable. Tenants’ rights, when it comes to your actual apartment get pretty involved, so make sure you know the highlights.

Habitable housing

It’s not enough for a property manager to provide you with an apartment; the apartment must be safe for you to live in it. This means more than a lack of dangerous conditions. Your renter’s rights entitle you to a home with usable utilities, including heat, electricity and water.

This area of your renter’s rights also means you have a home that’s safe and livable in other ways. Specifics within these guidelines require an apartment to have functioning locks on doors and windows, smoke detectors and a dedicated way to escape in case of fire.

Repairs

This area of landlord-tenant law requires action on both sides. To ensure you have a habitable home, it’s up to you to report any maintenance issues using the process that’s outlined in your lease. Find out the best way to report issues like this to your landlord (such as through email or an online portal).

On the management side, their responsibility is to complete repairs in a timely manner. Your lease will define what this means, but different repairs rank higher in priority. For example, failure to repair a heater in winter can quickly lead to an uninhabitable living space for safety reasons, whereas a garbage broken disposal doesn’t create that serious of an impact.

If your property manager fails to make repairs in a timely manner, you have additional rights. Check with state and local laws about what’s within your rights.

Privacy

Although you’re only renting a home, and someone else owns it, your rights as a tenant mean a certain level of privacy. Once your rental agreement is in place, a property manager cannot come into your home without proper notice.

Notice is also required for more than just repairs. If you’re getting ready to move, and the property manager wants to start showing your unit to prospective tenants, for example, they must give you notice each time.

Security deposit refund

Each state usually handles security deposits differently as far as how much you’re required to put down. It’s normal for you to pay a security deposit though since that protects the property manager from having to pay out-of-pocket for any damages you may cause while living in your rental.

As far a payment goes, some states set caps on how much a property manager can ask for. They also can’t impose a higher deposit for your rental, when compared to other units in the building, without a specific reason, like having a pet.

It’s also within your renter’s rights to get the security deposit back, in a timely manner, if it’s not covering any damages. Most state laws set the time frame at 30 days, and you’ll not only receive your security deposit back but any interest that accrued as well.

If any of your deposit is withheld, you can ask for written documentation of the damages it’s paying for, and the property manager must comply.

Eviction

The situations where your property manager has the right to evict needs clear stating within your lease. Make sure to review them before you sign it.

Standard landlord-tenant law states that you can get evicted if you break your lease in specific ways, such as:

  • Failing to pay rent
  • Allowing prohibited animals to live with you
  • Having roommates that aren’t on your lease
  • Committing a crime on the premises

As a renter, your tenant rights enable you to address evictable issues within a specified time frame before an eviction can take place. You will receive notice of a pending eviction from your property manager. If you fail to fix the issue, they can then file an eviction with the courts resulting in legal removal from your rental.

State-specific renter’s rights

Although you’ll find many standard regulations associated with renting if you move between states, expect additional laws everywhere you go. Since renter’s rights get regulated on both the state and local level, if you’re relocating to a different part of the country — familiarize yourself with local tenant laws.

Some unique landlord-tenant laws include:

  • In Hawaii, security deposits with no deductions must get returned within 14 days
  • A property manager must give 48 hours notice before entering your apartment in Delaware
  • West Virginia has no minimum notice required for a rent increase on month-to-month rentals
  • In North Carolina, two month’s rent is the required minimum for a security deposit on a one-year lease
  • A lease can get terminated once rent is only five days late in Arkansas

As you can see, some states have pretty extreme rules. Being aware of them can help you maintain a positive relationship with your property manager while also protecting your own rights as a renter.

Know your renter’s rights

No matter how great, or rocky, your relationship is with a property manager, you should always follow the law as it pertains to your situation. This not only protects you, but it ensures your property manager gets held accountable when anything isn’t up to par.

Familiarize yourself with state and local landlord-tenant laws, read your lease thoroughly before signing and do your research when faced with a potential issue. Protect yourself by knowing your tenant’s rights.

The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.

Lesly Gregory has over 15 years of marketing experience, ranging from community management to blogging to creating marketing collateral for a variety of industries. A graduate of Boston University, Lesly holds a B.S. in Journalism. She currently lives in Atlanta with her husband, two young children, three cats and assorted fish.

Source: rent.com

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Goldman analysts lowered their 2008 earnings estimate for JP Morgan Chase to $3.30 from $3.44 yesterday after the bank warned investors it could lose $450 million on home equity loans during the first quarter alone, according to a report by Marketwatch.

Last quarter, Chase reported $248 million in write-offs tied to home equity loans, up from $150 million in the third quarter and $51 million in the fourth quarter of 2006.

The net charge-off rate climbed to 1.05 percent in the fourth quarter from 0.65 percent in the third quarter, more than quadrupling the 0.24 percent rate in the fourth quarter of 2006.

Now factor in plummeting home prices and high loan-to-value ratios and you’ve got a huge problem, especially with “walking away” becoming all the rage these days.

Chase attributed the escalating losses to an over-reliance on Fico scores and underlying property values, along with layered risk and direct vs. indirect loan origination channels.

About a month ago, the New York-based bank reduced the maximum loan-to-value on second mortgages via the wholesale channel to 85 percent in many areas, while stamping out loans at or above 100% LTV.

According to a slide from Chase’s Investor Day presentation held on Wednesday, the bank originated $48.3 billion in home equity loans in 2007, a slim decline from the $51.9 billion originated in 2006 given the high-risk environment.

And as of the end of January, Chase still had $15.2 billion in CMBS exposure, $6.3 billion in Alt-A exposure, $2.4 billion in subprime and subprime CDO exposure, and $5.4 billion of CDO warehouse and unsold positions.

Shares of Chase were off $1.52, or 3.58%, to $40.92 in late trading Friday, not far from their 52-week low of $37.66.

Below is the delinquency rate chart for home equity loans in Chase’s portfolio:

(top photo: celinet)

Source: thetruthaboutmortgage.com

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As couples prepare holiday marriage proposals, Northwestern Mutual study finds 1 in 3 Americans believe serious discussions about financial dreams – and debt – should happen in the early stages of dating Almost half of Gen Z say financial compatibility is more important than physical compatibility MILWAUKEE, Dec. 5, 2023 /PRNewswire/ — December is, by … [Read more…]