Pay for Delete Collections - Is it Legit?å

Pay-for-Delete Collections: Is it a legit Credit Report Clean Up Practice?

As a credit cardholder, you have the right to appeal your credit report accounts, requiring the collection agency to conduct a re-investigation within 30 days. A dispute not answered within the prescribed timeframe is subject to removal from your credit report because of administrative oversight. The agency, however, can have your account re-audited (after giving you a 5-day notice) if it has proof the credit report is accurate, which may cause a negative report to appear in your file. However, do not flood a debt collector agency with disputes because they’re not obligated to investigate frivolous disputes.

Your credit history can legally stay in on your report for up to seven years if you are unable to pay your debt. You can clear your name with pay–for delete arrangement to remove the negative report sooner, if you make a deal with the agency handling your account.

Credit Card Collections

Is pay-for-delete collection legal?

The legality of the Pay-for-delete is a grey area, and the institutions involved should follow the guidelines set by the Fair Credit Reporting Act (FCRA). The FCRA requires collection agencies to provide accurate reports on consumer credit information or face penalties imposed by the Federal Trade Commission (FTC) for non-compliance with the FCRA –whose mandate is to protect the consumer.

You can dispute inaccurate information, and if that fails, you can try to negotiate for a pay for delete collection to clear your name.

Why do collection agencies not offer pay-for-delete?

Many debt collectors have binding contracts with credit bureaus, making it illegal to have a pay-for-delete plan. Others may risk filing your papers, seeing that the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have more significant cases to pursue, such as fraud and identity theft cases, and may not take action against minor FCRA violations.

On the other hand, the pay-for-delete collection is an effective strategy to convince defaulters to pay off a debt, and agencies may take up the risk to attract more defaulters to pay off outstanding debt and clear their names with credit bureaus.

It’s a win-win situation, and besides, these agencies interpret the FCRA as allowing them discretion to report consumer information.

Midland Credit Management, a collection agency, and a subsidiary of Encore Capital Group updated its credit reporting policy as of October 11, 2016, stating;

“We will stop credit reporting on accounts that are both: paid in full or paid in full for less than the whole balance, and more than two years from the date of delinquency. Besides, we will not report on any new accounts if: Payments begin within three months of the mailing of our initial notice; Payments are made each calendar month after that until the account is fully paid or paid in full for less than the total balance.”

The FCRA enforces a maximum time limit for reporting defaulters, but not a minimum time limit.

Encore reiterated the concerns with clients and further commented, “We listened to our clients, and we found a challenge with current practices that retain negative reports for seven years, long after a debt has been paid. It is with this concern that many consumers feel the only option to resolve the nearer-term debt is to dispute it. This practice repeatedly occurs, even if the clients are aware of the debt, and its legality, and that they should pay for it. Maintaining the record for seven years negatively impacts the client’s scoring system. Still, holding negative information for seven years, the current credit reporting and scoring system provide little motivation to pay off an underlying debt.”

Midland’s policy is unique, and it has perhaps inspired other collection agencies to adopt similar policies.

Can a removed account reappear in your credit report?

It depends on the time of payment. If you paid off your outstanding debt after your account was reported to the credit bureau, it is marked “paid” to reflect the current, accurate record. In some cases, you may plead your case if there was a change of address, and your bills went to the old address instead of your new one. In such a rare occurrence, the creditor or the collection agency may allow removal of the debt from your credit file.

The FCRA gives legal guidance to prevent deleted information from reappearing on your report if it is indeed inaccurate. If the debt is accurate, but out of date, you may make arrangements with your agency for a pay for delete collection. Creditors are obligated to report accurate debt information until it legally expires (after seven years).

If a paid account still appears in your credit report, can you dispute it?

As a consumer, you can dispute the accounts on your credit report, and request for an investigation as we’ve seen earlier. If your dispute goes unanswered within the allowed timeframe, it may be erased from your credit report.

The agency can report the same account in the future if it proves the information reported is accurate. Your account then automatically reappears in your file. The agency is required to notify you that the account will reappear in your file. The FCRA regulation requires the agency to inform you of the reversal within five days. Further, collection agencies should submit a delete notification to the credit bureaus.

Pay-for-delete collection agreements may not impact your credit score, since credit reporting is voluntary, and a collection agency may not file your updated report.

If you need your credit info updated quickly, call your agent to clarify which bureaus they shall contact to remove your account from the credit report.

If the agency approves pay-for-delete, it may take a couple of weeks for your account to permanently disappear from the report.


Pay-for-delete is not a common – or an above-board – practice. However, about 10 percent of collection agencies will allow pay-for-delete deals because they want to collect. On the other hand, avoid the hustle of lengthy disputes with your agency, pay your debts on time, and notify the change of addresses immediately to prevent adverse credit reports.

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