A lot of debt and bad credit score, what is the next step?

Question

I have a credit score of 501
I have 3 credit cards that are with collection agencies that total about $2800
one medical bill with a collection agency that totals about $4,500
I am a full time student and earn about $2300 a month as nanny, but I get paid cash, no taxes
My bills for the month total $1500 (rent, health insurance, electric bill, etc.)
I do not own a car nor do I have a morgage (in case you couldn't have guessed that already)
Should I pay these collection agencies or should I wait until the 7 years is up when they will be taken off my credit report?

Answer 1

One option would be a debt consolidation loan. The rates are generally lower that consumer debt (so your payment should be lower), and home ownership is not a requirement. You can use the website below to comparison-shop

Answer 2

Paying this accounts off is going to be your best decision here.

The bad thing about waiting for it to fall off your credit report, is that its 7 years from when the account is written off or closed. So, if they're still trying to collect money from you... your seven years hasn't even started yet.

I would try calling the collection agencies that are handling your bills and see if you can get on some sort of payment plan paying like $50-75 a month. Make sure you make each payment on time for each account. Take the credit card account that you owe the least amount to, and make as large a payment as you can afford to get it paid off. Then move to the next account and finally the third account. Then tackle whats left of the medical bill at that point.
Its better to have an account show up on your credit report as paid late, but in full then to have it show up as charged off as bad debt. When companies see this, they know the other company didn't get their money from you.

Answer 3

Your credit score is based on many things so it is hard to tell you what would be the best item for you to do. It depends on how old the debts are (Are they about to fall of your credit report, are they past the statute of limitations, or are they within the last two years, etc), what the original balance on the debts were, etc. If I were you, I would read up as much about credit repair as I could. You want to repair your credit yourself, the credit repair companies can only do the same things you can do for free and legally have to tell you that. Listed below is a link I have found helpful. It's free, has lots of advice about repairing your credit yourself, what the collection agencies can and can't do, and sample letters to send to the agencies.

Answer 4

Your total unsecured debt including medical bill which is with the collection agencie is $7,300.00.

If you join a debt settlement company who will work with the collections agencies too, your principal debt amount will be negotiated and brought down to around 30% to 705 depending on your credit cards.

You can be out of debt with a monthly payment of $336.92 for approximately 13 months. There are no hidden costs or penalties associated with this monthly payment. Their fees is also included in it so u need not pay anything upfront.

check this one out
http://www.debtfreeafterall.com

They are very good at this.

Answer 5

You sound better off than I am. I owe over $11,000 in credit card debt from medical and Rx. I am looking into bankruptcy because I have tried for four years to get things straight. I don't bring home what you do, so I am drowning. I keep getting further and further behind. You need to get on top of things now, make arrangements to pay the bills before just letting them go. They should have credit counseling free of charge that you can look into in your state. Try that to see if you can get what you owe lowered through that. I wish you the best of luck.

Answer 6

Credit repair does not require the assistance of a service. You can take a number of steps to help repair your own credit.

Although there are numerous credit repair companies offering their services for a fee, savvy individuals can do their own credit repair with a few simple steps. The advertisements placed by credit repair services touting their experience, qualified personnel and other qualifications can make the process seem daunting but it is really quite simple.

The basic steps for do-it-yourself credit repair include:

Request a credit report from all of the three credit reporting agencies
Carefully review all of the information on the credit reports
Dispute any mistakes on your credit report and document every step of the dispute process
Devise a debt reduction strategy
Establish good credit strategies now and carry them into the future
The first step of do-it-yourself credit repair is to request a copy of your credit report from Equifax, Experian and Trans Union. These are the three major credit reporting agencies and individuals are entitled to one free credit report annually from each of these agencies. Requesting a report from each of the three agencies is important especially if you believe there may be a mistake on one of the reports. The information on all three reports will be similar but mistakes may only appear on one of the records.

Once the credit reports are acquired it is time to review all of the information carefully. Each item on the report should be examined and discrepancies should be noted. In reviewing this information, highlight anything that seems suspect and review your documentation to verify the validity of the item.

After compiling a list of mistakes, it is time to officially dispute any inaccuracies on the credit report. The dispute processes will most likely involve filling out a dispute form or writing a letter detailing the alleged mistake. In both cases documentation supporting the validity of the dispute will be required. For specific information on how to officially file a dispute, contact the credit reporting agency directly. Once the dispute process begins, document every aspect of the process. This is important because dispute resolution is a time sensitive process with specific guidelines for how quickly a dispute must be resolved. The agency may be required to remove a disputed item from a credit report if they do not respond in a timely fashion.

When a negative credit report is a result of a poor credit history and not mistakes, only time will properly repair the credit. The long term credit repair strategy for financial errors in judgment includes devising a debt reduction strategy which will demonstrate diligence and establishing sound credit strategies which will be viewed favorably in the future. Credit reporting agencies do not hold grudges. Credit lapses are removed from credit reports after set periods of time and a history of good credit is rewarded with a solid credit score.

Answer 7

If the debts are recent, you should pay them. Waiting 7 years to buy something on credit is a long time. If the debts are old, maybe less than a year untill they fall off, wait it out!

Answer 8

Get Bad Credit Loan: Bad credit happens when you struggle to payoff your dues or cannot pay your dues. If you need cash but are stuck with bad credit history, do not panic. Opt for quick bad credit loans to help you met your financial obligations.

Answer 9

I have placed this in the source box. There is a wealth of information there and a great free debt management software program. I bookmarked the site as I return to it often for the advice it offers. I hope this helps you.

Answer 10

See a trusted Credit Counsellor who can help you with a plan to follow. Good luck.