Deleting Negative Accounts

The most important part of this process is first determine whether or not you are liable for any negative accounts within your credit report. If the negative accounts are collection accounts and over 7 years old, you are not liable for it and cannot be sued and/or garnished for the repayment. Moreover, the credit reporting bureaus cannot report negative accounts once it has surpassed the 7 year mark. If this happens to be the case, dispute this negative account to the credit bureaus reporting this information online through their dispute section or you could always call them up for help disputing information. Many times, when you get your credit report through the 3 major credit bureaus, they will input a small note next to the negative account on when the negative account is set to be deleted from your credit report. While this is helpful, it should not be relied upon as fact. It may be an unintentional mistake as these types of mistakes do happen from time to time.

Disputing a negative account with the credit bureaus is a fairly simple process and can be done instantly online. Basically, when you dispute an account through the credit bureaus, they will seek verification through the source reporting the information or in other words have the collection agency verify the account. Under Fair Credit Reporting Act 623(b) - USC § 1681s-2(b) you have the private right of action to sue the furnisher if they continue to report unverifiable information. It's also important to note, No private lawsuits are possible under 623(a) - USC § 1681s-2(a) only the Federal Trade Commission can enforce that part of the FCRA. This is a common mistake on consumer FCRA complaints. Verifying the account is as simple as the collection agency double checking the information within the account as accurate and reporting it to the credit reporting agencies as accurate. It's important to note: Leaving a comment such as “Consumer Disputes Account Information” in the FCRA mandatory comment section of your credit report can give you a credit score boost or a positive effect/improvement. This is contrary to what many credit reporting agencies have stated, as they say it makes no improvements. If you pay close attention, you'll notice the credit reporting agencies will remove the comment you left after some time has passed, usually after a few months and once it is removed you could see a score drop. You have the right to post another comment or the same comment again once the reporting agency removes your comment, which ultimately could give you a positive improvement again.

Now if your negative accounts are legitimate and is being reported correctly, disputing it may not make it go away. You're more than welcome to try disputing it and on some rare occasions it may not be verified which would get it deleted. Many times, when you dispute a negative account, the collection agency will start updating this account, which ultimately will lower your score. This is simply a tactic of the collection agencies. From their point of view: why are you disputing the negative account? You must want to improve your credit score, and by updating the negative info and lowering your score, perhaps you would be more likely to pay them to stop the updated info. In any case, this is usually temporary, eventually they will go back to rarely updating the info, if ever. The whole idea behind it is to hurt your score to get you to pay them so the account will not be updated anymore. This leads us to our next point...

Dealing with a Collection Agency

Once you pay a collection account off, it doesn't mean the account gets deleted from your credit report. In fact, many times by paying off an older collection account results in a bigger negative impact than if you left it alone. That's because this old negative account is refreshed or in a way, became new again. The way it becomes refreshed is based on the credit reporting agencies “updating” the account. This update could be “paid in full”, “settled” or other updates depending on what you worked out with the collection agency. This may result in a score drop and is something you want to avoid when you're trying to repair your credit.

One way you may avoid this possibility is offering the collection agency a “pay for delete” deal/agreement. A pay for delete agreement is when you offer to pay the collection agency (either in full or settle the account for less than owed) and in return they agree to delete the negative account/info from all sources reporting the information. Side note: We posted a pay for delete example below - feel free to use it. Some agencies will accept this with no questions asked, some will act like they never heard of a pay for delete deal, and some will say they do not accept pay for delete agreements. Anything other than they do accept pay for delete deals should be ignored. In many cases they will first tell you they don't, but if you play your cards right with them, they may sooner or later accept your pay for delete deal regardless of what they tell you.

There are 2 schools of thought when you deal with a collection agency. The first one is never talk to them because they know multiple tricks and to only communicate by mail. The other is talk to them because this will give you a better feel of where you stand, but be mindful of the stunts they could pull. Either way will work, but in either case, make sure you look out for their traps, which we'll go over...

The first rule of thumb is that you shouldn't trust or have any faith in what they say. As we stated above, regardless of what the tell you about pay for deletes, you shouldn't trust them. The next thing and perhaps just as important, never admit anything. Don't tell them this is your account or that you promise to pay them in the future. This could constitute as a renewal on the SOL and if this were to happen, the account would be (in a way) like new again. The next thing you should be aware of is some of the illegal or almost illegal threats they could make to you. Reading or at least being familiar with the FDCPA can give you a better understanding on what is and what isn't legal. Here are a few key things to look for:

Sending a pay for delete deal needs to be crisp, to the point and carefully put together. You do not want to make it seem that you are in anyway admitting you owe this debt. You are simply paying the debt that is claimed by them to remove it from your credit report(s). Having this agreement/letter state your rights as well as theirs, in many cases, shows you mean business and have done your research. This usually results in them not trying to pull any stunts. Your pay for delete letter needs to also explain what may happen if they decline this offer. For example, you should explain you may or may not make another offer for this unverified/unvalidated debt and if you do, it will be for a lesser amount. Here is a basic pay for delete example in a PDF format, feel free to insert your relevant info and send it to your collection agency:

Example of a Pay for Delete Agreement

In all cases, never pay a collection account with anything that has your personal information on it. For example, never pay with a credit card, debit card or personal check. If an agreement has been made, pay with a cashier's check or money order. Do not pay anything at all until you receive a signed agreement. If you do not have a signed agreement – you do not have an agreement. It goes back to rule one - never trust them... If you did have to go to court over the collection agency not holding their end of the agreement, and you do not have a signed agreement, it probably will not stand. The collection agency knows this, so if you get them to sign an agreement they are far more likely to follow through on the agreement.

If the collection agency isn't willing to accept a pay for delete deal, the next thing you should try is disputing the account online with the credit bureaus. Again, this is a simple thing for the collection agency to verify, but more importantly, you are causing them to use valuable time and resources. The reason you do this, you want them to put in a lot of time for your account, an account they believe you're not going pay on unless it is deleted from all credit reporting agencies. Once you dispute this info the collection agency and/or credit reporting bureau(s) have 30 days to verify the disputed information.

Once they verify the account, the next thing you should look into is requesting full validation of the debt. In order to ensure your rights are protected, you should request for validation within 30 days from the date of first communication. This is the tricky part of the law, what constitutes as an initial communication? Technically, this could be the first phone call, letter, or even a summons to appear in court. This goes back to not admitting anything. When you make communications with them, you should represent that this is the first time you knew about this debt they claim you owe. If that is the case, your first pay for delete agreement sent to them could constitute as an initial communication. In that pay for delete agreement, by stating this debt is disputed by you and that you have the right to request verification and/or validation, but willing to resolve the matter with a pay for delete agreement before taking those steps, could buy you some time since your initial communication was not acknowledging the debt but simply a restricted offer only. You can still request for validation after the initial 30 days, however, the collection agency isn't legally required to respond to your validation request. Unlike disputing the account through the credit reporting agencies, validating a debt is much more in depth. Validating a debt requires the collection agency to prove they have the legal right to collect on this debt. This would mean they would have to provide to you a copy of the agreement/contract with the original creditor or account statements from the original creditor. They would also need to provide (upon your request) - in short: what payments you have made, what fees you have paid, what additional fees they're seeking, what interest rates were you charged (with both the original creditor and the collection agency ~ if applicable), and any other applicable questions related to the history of that particular collection account. You can request for the original contract between you and the original creditor. As a side note, depending on what the collection agency sends as proof they can legally collect this debt (account statements for example), could satisfy the request for the original contract.

Be sure to send any communications by way of certified mail requiring a signature that they received your request. If for some reason they do not respond to your request, you can send a copy of the validation request as well as the receipt of the delivered request to the credit bureaus as proof you've sent the request but didn't get a response. If that is the case, the credit bureaus will need to remove this unvalidated debt from your credit file. Since we're on the technical subject, a collection agency must notify you in writing within 5 days of the initial communication informing you of your rights to request for debt validation. FDCPA 1692g: Validation of Debts: (a) Notice of debt; contents-

(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

The debt validation process will probably take some time for the collection agency to collect this information and more importantly you are trying to set up a pattern of wasting their time, and giving them the impression you have no intentions on paying unless it is deleted. Depending on what type of debt this is, you may have more options available to you. There are HIPAA regulations for medical debts for example, as well as a pending bill H.R. 3421 ~ Medical Debt Relief Act. In short, this Act would force medical debts to be deleted from your credit report(s) once it is either paid in full or settled for less than owed. If your collection account happens to be a medical debt, add a paragraph expressing your option to wait until this law (H.R. 3421) passes, if they're not willing to accept the pay for delete deal now. This will hint to them you're not anxious to get this deleted and you're more than willing to take as long as it takes in order to get this account deleted. Your best option is having them believe the only way you will pay is if the account is deleted.

A Side Note: Think of it like this, if no one paid a debt collector/agency unless they deleted the account from all sources reporting it, would they begin deleting the accounts or fold as a business because they couldn't collect anymore? You have what they want - money and if everyone demanded the negative account to be deleted or they won't pay, they would begin deleting accounts once paid with no questions asked or any problems... So often people believe the collection agency holds all the cards, but the key thing is, they can't continue doing business unless consumers are willing to pay them. Consumers should be willing to pay, provided it is a legitimate account owed by you, but with your payment, you shouldn't be forced to have 7 years of bad credit history because of it. It's a win - win deal for everyone, the collection agency gets paid, and you get the negatives off your credit report(s). As time goes on and more and more people use this situation to their advantage, collection agencies will have to begin accepting pay for deletes with minimal, if any issues.

A few collection agencies may try to play hardball with you. This may include them sending you a summons to appear in court. However, the courts have already set precedence on this matter. Their findings in the case: Spears vs. Brennan No. 49A02-0003-CV-169, among other reasons, was that a collection agency shouldn't summons someone to court before validating a debt. If you requests validation on a debt, it must be validated before summoning you to court, not used as a tactic or revenge on you for requesting validation.

Continue to offer smaller amounts on your pay for delete agreements if they were not willing to accept the first offer. You never know, while they may not accept a smaller amount they may counter offer you a larger amount sometime in the future to be paid and in return they will delete the negative account from all credit reports.

If all else fails, and they begin calling you all the time, you can send them a cease and desist letter (in PDF format). Basically this requires them to only communicate by mail – a great way to get the annoying ones off your back...

Next let's work on what to offer a collection agency... You could offer the full amount if in return they will delete the negative info, or you could try to save some money and offer a smaller amount. In either case, offer whatever you want but make sure you have a pay for delete agreement with it. If you really want to get into showing them you've done your research, visit SECfiling.com. If the collection agency is a publicly traded company, you can find out what they paid for bad debt and what the retail value is (if the debt was paid in full). Doing some basic math, you can divide what they paid (X) by what the retail value is (Y). For example if ABC Collections paid $100,000 for 1 million dollars worth of bad debt, you could figure out they paid 10 cents on the retail dollar or 10%. So if you owed $1000.00 it would be safe to assume ABC Collections is in it for at least $100 plus a little extra for overhead (electric, rent, phone bills, etc) and also, they're not collecting on all the debts, some bad debts will simply never be paid. On the average, a collection agency typically pays around 3-5 cents on the dollar, however, they typically will not accept much less than 50% of what's owed, especially for newer accounts. Collection agencies generally accept smaller amounts as the account ages. By letting them know what they paid for your debt, they will be far less likely to try to pull anything past you. In their opinion, you're a little too involved and knowledgeable to pull anything past... Whether you are or you aren't, giving them the impression you've done all the research possible will benefit you. If they're not a publicly traded company, this will not work. Some collection agency do not buy debt, instead they are assigned to collect on it, and if they do collect, they'll split up the money collected between the original creditor and themselves. In any case, offering around 50% of what is owed is a fairly decent start and opens the door for negotiations. You can offer more or less depending on your situation and funds available, as well as your willingness to negotiate back and forth.

If your negative info happens to be through your creditor on a still open account (example: credit card, loan, etc...), you can try working a deal out with them as well. Creditors aren't in the business to ruin your credit report and often if you try to work something out, they may comply. This doesn't mean they will or that they have to, but it does mean it's a possibility. An example of a deal you could make: if you were late a few times or missed a payment or two in the past, try calling them up and level with them that it was a mistake. You do not want to hurt your credit (which has already been damaged by having the late and/or missed payment) and you do not want to be late or miss another payment again. Try to see if they're willing to remove the negatives if you were to have timely payments over the course of the next 6 months or so. This doesn't guarantee they will work this deal out for you, but often, when it means you're paying them on time, they may just make that deal. It doesn't hurt to see what they can do, and remember, a lender has the absolute right to report the information, not report it at all or change what is reported...

There are other negative accounts that are going to be nearly impossible if not impossible to remove. A few examples would be: Bankruptcy, Tax Liens, and Judgments. These types of accounts can be removed but it takes an immense amount of knowledge of the ins and outs on how to remove these types of negative information. You could try using a professional credit repair service and while we want to start off by saying be careful when using a credit repair company, it is possible they could get it removed. Our personal choice of credit repair specialist would be one who doesn't charge anything until the account has been deleted. You should also be familiar with the federal laws mandated on the credit repair companies - See: Credit Repair Organizations. This way you aren't out anything if they are unsuccessful. You can find a list of credit repair companies, and if you pay close attention to the first one listed, you'll see this company fits our description...

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