What is a Paid in Full Letter and How do you Make One?
When you are ready to make your final payment on a loan or have decided to pay a complete balance so that you can own the property, you will need to submit a paid in full letter to your creditor with your payment. This paid in full letter indicates that you intend to pay the balance and believe that the balance indicated is the true payoff. You need to know how to make a paid in full letter before sending it to your creditor.
What Does It Mean to Pay in Full?
When you pay off a debt in full, this means that you cover all monies associated with the account. This is the outstanding principle payment, interest fees that have been applied, and any other fees that are attached to the debt in one lump sum. You can contact the agency directly to get a payoff quote and determine how long that number is good for, as interest charges will continue to accumulate the longer you wait. When you are ready to pay this balance and conclude the account, you will send a check for the balance and a paid in full letter.
What is Included in a Paid in Full Letter?
When you are drafting a pain in full letter, you need to know what type of information to include. The information that is required is below:
- The name affiliated with the account
- The account number
- The balance of the loan
- Your address and contact information
A paid in full letter will need to come from the account holder, or one of them if there are multiple on the loan. In that letter, the account number should be listed, so they know where to apply the payment.
You also want to indicate the balance of the loan and include a check or money order that reflects that same amount. Your address and contact information should be provided on the paid in full letter so that they know where to send any deeds or titles to the secured debt that is associated with the loan. It is imperative that the letter is dated so that there is a record of when it was sent to the company, addressing the agreement.
Request a Written Response
When you send the letter, make sure to include a statement in the paid in full letter that says you want a confirmation of receipt sent back in writing to your address. It is essential that you have that documentation should there be any issues regarding the account later and you can reference the receipt of the paid in full letter from the company.
Sending Paid In Full Letter to a Collection Agency
If you are planning to send a paid in full letter to a collection agency for a delinquent balance, you want to add some requests to that letter on how the account is removed and listed on your credit report. For example, if you are paying the entire debt balance instead of a discounted offer that has been presented to you in a previous letter from the agency, you want them to say explicitly that the debt was paid in full. Anything less on your credit report could have an adverse affect.
If you are sending this letter to a collection agency, you also need to indicate on the paid in full letter that this will conclude the account and no further action should be taken for additional funds or anything else that regards this particular debt.
Type Your Letter
While you can send in a handwritten letter, it is more official and presentable to have the paid in full letter typed up with a handwritten signature at the bottom. When the letter is typed, there is no miscommunication or confusion based on your handwriting. In some cases, if you do not have the best handwriting when attempting a paid in full letter, the company could state that they misunderstood what you were asking, especially if this is in reference to a collection account.
Make a Copy of Your Letter
Before you mail out your letter, make sure you make a copy of the paid in full letter that you indent to send the lender or collection agency. Once you send it out, there is a high chance they will not send you a copy of the letter in the response. You need to keep a copy of your records for reference, if necessary.
Mail Your Letter Certified
While you can have a standard piece of mail postmarked with a date on it, certified mail provides a detailed timeline of when you mailed the letter and each stop it made, including the destination. When you go to the post office to mail your paid in full letter with your check, make sure you have it certified for a few extra dollars. This will give you piece of mind knowing when it was received and you have documentation to prove that.
What if I Receive a Paid in Full Letter?
There are cases where you could actually be on the receiving end of a paid in full letter. This letter usually comes when you make a final payment on a loan and the company reaches out to let you know that your loan is complete and you no longer have an outstanding debt. In most cases, these letters come with a notation that you will be receiving a title or deed in the mail in a certain time period.
This letter can come as a response to paid in full letter you sent to your mortgage company or auto lender. Keep this letter, so you can refer to them if you do not receive your documentation in the listed time frame. When you get your title or deed, make sure you file it somewhere safe along with the paid in full letter that you received from the lender.
You could also receive this letter from a debt collection agency as a response to your final payment. Individuals will need to review the verbiage in the letter to ensure they are concluding your account at this time. You also need to watch your credit report for the next month, so you can see the changes on that account reflect what is in the letter. You are looking for it to state that the debt is satisfied and paid in full.
Why is the Paid in Full Letter so Important?
If you are paying off a delinquent debt, for example, and you do not have a paid in full letter attached with the requested stipulations, the collection agency may not property report your account to the crediting bureaus. This could have a negative impact on your credit score and you may not be able to have it changed once they make the final determination. This can stay on your credit report for up to seven years, having a sudden impact on your credit and then gradually less over time.
Sample of a Paid in Full Letter
Below is a template that you can use to get started on your own paid in full letter. Make sure each piece of information has its own line and you are clear in what you are attempting to do with this letter.
First and Last Name
Name of Creditor or Collection Agency
Address of Creditor or Collection Agency
Subject Line: Name and Account Number
To Whom it May Concern:
My name is _______ and I am including the final payment for my account ___________ that is mentioned above. This payment will fulfill my financial obligation to this debt and close the account. Upon receiving and processing this payment, please send written confirmation that this account is now (paid in full or settled in full) based upon our agreement on (date).
If I do not receive a written confirmation within 7-10 business days of my check being processed, I will assume that we agree this is the final payment and you have accepted the terms we agreed upon. Please make this notation to tall credit bureaus immediately that the account is settled and now closed.
Any further action that is taken by you regarding this account after the final payment is processed will force my hand to contact the State Attorney General’s office for harassment and/or personal legal action
(handwritten signature in this space)
(Print your name)