What's The Best Way To Pay Off My Collections?
If you can pay it then there's no need to involve a credit counselor.  After all, their main role when you use them is to negotiate payments with creditors so you can pay off your debts.  In this case you have the funds to pay, so why make it any more complicated than it needs to be? To be honest, a 597 score is going to make it tough for you to find auto financing.  Whatever options you find, they'll charge pretty steep interest rates and have high payments because they'll keep you on as short a payment term as your finances will allow.  I would strongly suggest that you work on improving your score for awhile before trying to buy a car.  If you can, buy a car for cash.  You might not get much, but it will solve your transportation problem while you work on resolving your credit issues. Using a credit counselor won't have any impact on your credit score as far as the debts are concerned.  What will make a difference is not having them show as open collections, which is pretty bad.  You'll still take a hit for having gone to collections in the first place, but paying them off will mitigate at least some of the effect. I hope this helps. Good luck!
Pay them off immediately. But, as I note in my article Too Little Debt?, a zero utilization is actually a negative hit. So you want to just use the cards to get over 1%. i.e. if the lines add to $38K, just charge say, gas and some groceries, $100/wk. Pay in full every month. It's the amount on the statement that counts, not the amount carried month to month accruing interest, which, I hope is zero for you from now on. Short Answer Collections agencies and the businesses they collect for are two different animals. If you don't want this to hurt your credit I suggest you deal directly with the hospital. Pay the bill, but prior to paying it get something in writing that specifically says that this will not be reported onto your credit. That is of course if the hospital even lets you pay them directly. Usually once something is sold to a collections company it's written off.  Long Answer Credit reports are kind of a nightmare to deal with. The hospital just wants their money so they will sell debt off to collections companies. The collections companies want to make money on the debt they've bought so they will do what ever it takes to get it out of you, including dinging your credit report. The credit bureaus are the biggest nightmare to deal with of all. Once something is reported on your credit history they do little to nothing to remove it. You can report it online but this is a huge mistake because when you report online you wave your rights to sue the credit bureaus if they don't investigate the matter properly. This of course leads to massive amounts of claims being under investigated.  So what are your options once something hits your credit history? I know this all sounds bleak but the reason I go into such depth is that they likely have already reported it to the credit bureaus and you just don't see it reported yet. Good luck to you. Get a bottle of aspirin. "There are two solutions. One is financially better, the other is psychologically better.  Financially better: You should pay off loans in the order of interest rate, so the 9% first, then the six percent, then the 3-4%. If you pay back $1000, the first one saves you $90 a year in interest, the second saves you $60, the third $30-$40 a year. Every year until everything is paid back.  Psychologically better: Some people have psychological problems paying back debt, and it is better for them to pay back small loans first. If you feel better having two loans instead of three, and feeling better makes you able to save money and pay back the other loans, while having three loans would make you depressed and unable to make savings - pay back the smaller loan.  If you don't have that kind of problem, use the ""financially better"" method." Get it in writing from the debt collector first that there will be a pay for deletion.  This is the most fail safe way that I know to get a collections debt completely removed from a credit report, and also without the chance of it being put back on the report by another agency. The debt collection agency (DCA) has purchased the debt and has the rights to your original account. The original creditor will have nothing to do with you anymore. If the DCA does not want to work with your payment schedule, simply deposit the money into an account. Don’t touch the money. Hopefully you save enough money soon enough to pay off the debt before it falls off your credit report. If not, well, enjoy the money you saved. Suing is a legitimate option as well as screening your calls but here's another idea which has personally worked and relates to the collections I did for awhile.  Talk with the collector.  Outstanding debt gets sold many times and each time a new collector gets their hands on an account they do their due diligence which means calling every single number multiple times.  Collectors a looking for consumers who actively evade collections calls for years. My recommendation is to use logic and explain the situation.  Give your first name and describe when you received the phone number and then ask a simple question.  When in the last 3 1/2 years have you or any collector had a successful hit from this number.  They'll respond never in 3 1/2 years.  The collector notes the account for themselves and future collectors.  Debt collectors are about about making money, not wasting time and they do review all notes pertaining to an account.  Will it work?  Maybe not but hopefully it will stop the calls with a short conversation.  Good luck. "Is it common in the US not to pay medical bills? Certainly not.  What some might do, however, is not pay them immediately, with the intent to negotiate them down or get them written off.  You can also see if there's a discount for paying immediately - I've had moderate success with this, but it was during a time where we couldn't pay them all immediately, so I was more trying to figure out which ones to pay first rather than just haggling.   The obvious risk is that they go to a collections agency and get reported as unpaid debt to your credit.  I'm with you, however - it's a service that you received and it should be paid. I must precise that they are wealthy upscale members, who can afford paying these bills. Are you certain that they have large medical bills?  I suppose it's possible that they have resources that  can negotiate these on their behalf, or they don't care about the impact to their credit score. But to say ""no one is doing it here"" seems ludicrous." This doesn't seem to explain the odd behavior of the collector, but I wanted to point out that the debt collector might not actually own the debt. If this is the case then your creditor is still the original institution, and the collector may or may not be allowed to actually collect. Contact the original creditor and ask how you can pay off the debt. The first thing you should do, and should have been doing all this time if you weren't, is to take the money you would've paid in the payment plan and set it aside in a separate savings account.  If your plan was 2 years, $65 a month, then set that aside, now. That will allow you to be in a better negotiating position when this is finally resolved.  It's also possible this takes two years to be resolved - in which case you'll be in position to pay the debt off in full at that point!  It's also possible at some point in the future you'll be offered to settle for half or something like that, at which point if you've saved several months of payments that might be more practical to do. As far as what to do about the charges being removed, unless you have a specific reason for believing they're invalid, that's probably impossible.  You could go to the Public Service Commission (outlined in this article about making complaints about overcharges from ConEd); it seems like it's probably too late for that, honestly, but who knows.  If you'd made more of an effort at the time, it's possible you could've disputed them back then with PSC.   And, as far as what to do with requiring written payment plans: absolutely, 100%.  I would try to find out why you're not getting the plans.  Do they have the wrong address, perhaps?  Or is your mail sometimes poorly delivered?  Ask them to send it via certified mail (you may be charged a few dollars for this), or ask them to e-mail you a copy while you're on the phone with them (my preferred option). Bill collectors like getting their money, so they ought to help you out with this. The details of credit score calculation tend to change periodically, but the fundamentals are mostly consistent.  Pay your bills, keep your average account age high, overpay your credit card minimums, and keep your overall debt low.  And do soft pulls on your credit report to see what's happening. First, the simplest route: pay all your bills early or on time.  Automatic deduction may be useful in this regard, especially for bills with predictable amounts.  A corollary to this tip is to never leave an unpaid bill.  What often happens to young people is in the course of moving around they leave the final bill unpaid and it gets reported to collections.  Make sure you follow up online with all bills, even after canceling the service. Second, average account age and oldest account age matter.  Open an account like a credit card and never close it, so you'll have an older account (hopefully a zero-fee card).  Try to keep other accounts open rather than closing them (no need to cancel a zero-fee credit card) so your average account age stays higher.  A card that works on internal systems (like a gift card) is not going to show up on a credit report; a card that works like any VISA/MC is likely going to show up.  The rule of thumb is if they need your SSN to run a credit check for the application, then the card will appear on a credit report.  You can pull your credit report to find out if the card is listed (you may have to allow time for lag before the card appears, but I'm not sure how long that might be).   Third, a tip for extra credit score is to pay more than the minimum required on credit card bills.  You can achieve this by either using your credit card at least once a month or by leaving a small hanging balance each month so there's always something to overpay next month.  Credit card reporting will be either: unpaid, underpaid, minimum paid, or overpaid.  Minimum payment helps your score and overpayment helps more.  If you can use your credit card every month, that will give you something to overpay every month.  Otherwise, you can leave a small debt left on the card but still pay over the monthly minimum.  However, your total debt load, especially debt carried on your cards, counts against your score; aim for less than 10% of your limit. Finally, of course, is to pull your credit report periodically.  You need to know what others are seeing.  Since debt load utilization matters, make sure the reported card maximum is correct on your credit report.  Talk to your bank or account issuer if the limit is wrong.  If a collection appears, then you need to handle it.  Often you can negotiate with the collector, but be careful to negotiate how they will report the resolution.  You want them to agree to remove any negative information (either in exchange for payment or because of a mistake).  Failing that, you want them to mark it paid in full or satisfied in full; letting them notate your score that you only partially paid is what you want to avoid, since it most signals someone with cash flow problems and credit issues.  They control their reporting to credit bureaus, so if the person on the phone demurs, ask to speak to their supervisor or someone with negotiating authority.  Try to get any agreements in writing. Remember that your total debt load is a factor in your credit score.  Home loans and student loans do affect credit score.  If you take on a smaller home loan, then it will affect your credit less harshly (and leave you with smaller monthly payments). I see some merit in the other answers, which are all based on the snowball method. However, I would like to present an alternative approach which would be the optimal way in case you have perfect self-control. (Given your amount of debt, most likely you currently do not have perfect self-control, but we will come to that.) The first step is to think about what the minimum amount of emergency funds are that you need and to compare this number with your credit card limit. If your limits are such that your credit cards can still cover potential emergency expenses, use all of the 4000$ to repay the debt on the loan with the higher interest rate. Some answer wrote that Others may disagree as it is more efficient to pay down the 26%er. However, if you pay it all of within the year the difference only comes to $260. This is bad advice because you will probably not pay back the loan within one year. Where would you miraculously obtain 20 000$ for that? Thus, paying back the higher interest loan will save you more money than just 260$. Next, follow @Chris 's advice and refinance your debt under a lower rate. This is much more impactful than choosing the right loan to repay. Make sure to consult with different banks to get the best rate. Reducing your interest rate has utmost priority! From your accumulated debt we can probably infer that you do not have perfect self-control and will be able to minimize your spending/maximize your debt repayments. Thus, you need to incentivize yourself to follow such behavior. A powerful way to do this is to have a family member or very close friend monitor your purchase and saving behavior. If you cannot control yourself, someone else must. It should rather be a a person you trust than the banks you owe money. If you know the amounts that were combined ($5,000 and $7,500 in your example) -- NOT the original loan amounts necessarily -- then you can calculate a payment schedule (in Excel, Google Sheets, online, etc.) using that amount and the interest rate.  You can then apply your payments ($100) to that payment schedule, making sure to either accrue interest if your $100 didn't cover the monthly payment, or pay down extra principal if your $100 more than covered the payment.   The outstanding principal is the amount left or remaining balance. A program like GnuCash or Quicken makes doing the payment schedule, and applying payments relatively easy to handle.  Spreadsheets will require you to have 36 lines (3 years x 12 months) of payment and recalculation detail, but that shouldn't be too much work. To be fair to your mother, make sure you include any partially accrued interest on the full balance when paying it off.  Or even better, include a full month's interest in the pay-off amount. I have this exact same issue.  Event the dollar amounts are close.  Here is how I am looking at the problem. Option 1:  Walk away.  Goodbye credit for 7+ years.  Luckily I can operate in cash with the extra $800 per month, but should I have a non medical emergency I might be SOL.  With a family I am not sure I am willing to risk it.  What if my car dies the month after I quit paying and the bank chooses to foreclose?  What if my wife or I lose our job and we have no credit to live? Option 2:  Short sale.  Good if I can let it happen.  I might or might not be on the hook for the balance depending on the state.  If I am on the hook, okay, suck but I could live.  If I am not on the hook, it is going to hurt my credit the same as foreclosure.  It isn't easy, you need an experienced real estate agent and a willing bank.   Option 3:  Keep paying.  I am going for this.  At the moment I can still afford the house even though it is at the expense of some luxuries in my live.  (Cable TV, driving to work, a new computer).  I am wagering the market fixes itself in the next several years.  Should the S hit the fan in most any manner, the mortgage is the first thing I stop paying. I don't know what other options I have.  I can't re-fi; too upside down.  I can't sell; the house isn't worth the mortgage (and I don't have the cash for the balance).  I can't walk away; the credit hit wouldn't be worth the monthly money gain. I have no emotions about the house.  I am in a real bad investment and getting out now seems like a good idea, but I am going to guess that having the house 10 years from now is better than not.  I don't care about the bank at all, nor do I feel I owe them the money because I took the loan.  They assumed risk loaning me the money in the first place.  The minute it gets worse for me than for the bank; I will stop paying. Summary Not much to do without a serious consequence.  I would suggest holding out for the very long term if you feel you can.  The best way to minimize the bad investment is to ride it out and pray it gets better.  I am thinking I am a landlord for the next 10 years. I think I'm reading that you cosigned a loan with a friend, and they've stopped paying on their loan. Not a whole lot of options here. You'll have to pay the loan off by yourself or allow the loan to go into collections in hopes that you'll get more money later and pay it off then. Small claims court is definitely an option at that point. Next time, perhaps try not to cosign loans with friends unless you really trust them and are confident that you can pay the loan off if they cannot. Once a debt has gone to a debt collector, you have to work with the debt collector to settle your debt. Essentially, the department store sold your debt to the debt collector so they don't have to deal with it anymore. You have rights when contacted by debt collectors. You can negotiate a deal so that the amount you actually pay is lower than what you owe. It is illegal for them to quote you for a higher amount than what you actually owe! Also, they can't threaten you or pretend to be a credit bureau. Your best bet is to work with them and negotiate a better payment. Don't give up. Collectors often times purchase the debt for a very low amount, so even if you pay less than what you actually owe, the collector will still make a profit.  https://www.credit.com/debt/collections-crash-course/