Do negative items need to be paid before they can be removed from my report?

No. The fact that a derogatory piece of information is paid has nothing to do with its being removed from your report.

Removing an item from your report DOES NOT eliminate your obligation for payment. It simply will not appear when a potential credit grantor is looking at your report. Leaving an item unpaid runs the risk of the creditor taking further action against you that damages your credit after it is cleaned up. (like submitting it to a collection agent or filing a small claims court action) In either case, you receive ample advanced notice to contact the creditor and settle the matter before any damage to your credit appears. You can also negotiate to settle unpaid obligations - ask for professional assistance.