Reply to Debt that's already gone to collections

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[quote=Anonymous]If you want to do it yourself, you can.  It can be hard to find a reputable company that won't take your money and manage to trash your credit even more.

Paying anything on the debts will restart the clock, so they will stay on your credit report and impact your score for 7 years or so from the last activity on the debt.  You need to prioritize the debts if you want to pay them off.  So list out all of the debts that you have in chronological order.  Things that are all around the same time, sort by the size of the debt, smallest to largest.

Here is how I would prioritize:
1.  Debts not in collections:  Get yourself current on any debts that have not gone into collections yet.
2.  Debts in collectsion:  While you can't remove the fact that the debt went into collections, I beleive having paid it off will look better than continueing to let it languish until it times off your report.  
     a.  Most recent first
     b.  Smallest to largest

I would only make payments on debts that have not gone into collections.  If you can get yourself current on those and still have extra money after making your monthly payments I would save that money up until you can pay off one of the debts that has gone into collecions completely.  If you try to negotiate for a smaller lump sum payment to settle the debt, make sure you have it in writing that they will consider the debt to be paid in full.  You will owe taxes on the forgiven portion of the debt.  As you work on the more recent debts, some of the older ones may age off of your report.  I would not pay anything on those at all.

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