This is a very confusing area of credit repair. A lot of people talk about Pay For Delete, but no one explains what it is or how to do it. Pay for Delete is mediated settlement on debt. Basically, the creditor agrees to change the way a debt is reported in exchange for payment.
Your credit report is actually paid publication. The credit reporting agencies are well paid to compile a database of your financial accounts and how you pay your bills. Every time you apply for credit, you agree to let your credit check this database. The federal and state laws that govern how your credit is reported are regulations to prevent companies from reporting debt without proper foundation or proof.
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Determine your eligibility for settlement. This process applies to situation where you have account that is seriously delinquent and has been reported to one of the Credit Reporting Agencies in a negative way. You need to be ready to make a lump sum payment to close the account. The creditor needs to be willing to compromise to settle the account. The original creditor is less likely to be motivated to make this kind of settlement. A small business is likely to take the owed money personally. When dealing with a large company, it may be tough to figure out who is authorized to alter the way your account is listed on e-Oscar (the computer system that the credit reporting agencies use). Collection agencies are more willing to settle debts. This is because they bought your debt for pennies on the dollar, and any amount of money that they get from you is profit. Collection agencies and Creditors weigh several factors when deciding whether to settle. The main threat that a creditor has against you is to file a civil lawsuit. In court, they can go after assets and garnish your paycheck. Also, a judgment can stay on your credit report for 20 plus years depending on the statute of limitations for civil judgements in your state. This is very expensive for the creditor, and they can lose the case if they don't have all the evidence the law requires. The decision to sue you, is based on the strength of their case, and the amount of money they can get from you. If you own your home, and have a steady job, then it is reasonable for the collection agency could collect their money. If their evidence is strong, then the judge can even allow high fees and make you pay for court costs. One weird part of this is that, the less money you have to more likely the collection agency will be willing to settle. If you have nothing, then getting a judgment against you doesn't put a dime in their pocket.
Changing the way this debt is listed on your credit report is considered a mediated settlement. It is no different than a settlement in which you pay a reduced portion of the debt. The collection agent bought your debt for pennies on the dollar. These people don't get a salary. They get a percentage of money you pay on this debt. There is a good chance that the person that calls you six times a day doesn't get a dime if the case goes to court. For a debt collector, the brass ring is to get you to pay full debt, plus all the fees they tack on. Many creditors are willing to compromise to get your mone
Send a debt validation letter by certified mail with return receipt requested. This will require the creditor to send you their records proving that they own the debt, and have proof that you agreed to pay this money. This helps with the motivation part. It is a time consuming process and any effort they have to make will make collecting this debt less profitable. Also, will be part of the discovery that they will have to provide to sue you. If a creditor cannot validate your debt, then cannot win a civil suit against you. It is also important to remember that if they don't "own" the debt, they can't change the way it is reported. If they are collecting this debt as a service to the original creditor, then they will need their authorization to change the way it is reported.
Send a separate letter by CMRRR that outlines your proposed settlement. The amount you offer to pay should be at least as much as the original debt. At this point, it is likely that that fines, and interest have been added to the amount you owe. It is also possible that the creditor has offered to settle the debt for a lesser amount. Your letter will state that you are not admitting that you owe this money, but you are willing to offer this amount of money, in exchange for an agreement about deleting this account from your credit report or stating that the account was paid in full, never late, not charged off. It is more likely that the creditor will agree to delete the account, rather than improve the trade-line.
Be civil! Communicate in writing! The best time to try this is when the creditor has offered to settle this debt for a lower amount.
Restrictive Endorsements don't work! This a method where the debtor writes mini illegal contract on the back of the check that states something like "by cashing this check you are agreeing to delete this account from my credit report". It is not enforceable, and in most states the creditor has a perfect right to ignore it or just cross these words out.
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