Paying off old debt.?

I have about $1500 of bad debt right now, ( a couple of cell phone bills and credit card bills )
These are so old that all ( 5 ) creditors are willing to settle with me right now for about half of the original amount.
I have $1000 cash right now to put sricktly towards paying off this old debt.
Should I settle with these creditors or should I slowly pay the full amounts?
I heard its better to pay the full amounts because it looks better on your credit score, but thats just what a collector told me.

I have already challenged everything and got what I could knocked off for free, now I'm left with these 5 remaining creditors.
What should I do, where should I start????

I appreciate all your good advice. thx

I believe that whether you pay off and old debt is dependent on your specific situation, how long it has been and what you want to accomplish in the short term (next year) and long term (2 - 3 years), very long term (4 - 7 years).

You said that these were old debts. How old? If they are getting to the 7 year mark of dropping off your credit report, then this may be why they are willing to settle. Or they may be past the statute of limitations for taking you to court and getting a judgment. Which leaves them only with the option of trying to convince you to pay out of the goodness of your heart.

There are a few dates that people should keep in mind when it comes to paying off delinquent debt. After about two years, you will start seeing the negative effects of delinquent accounts start to deminish. Meaning your credit score will start to improve if you have stayed current on your debts for the most current 2 years. The statute of limitations for a creditor taking you to court and getting a judgment on credit card debt is 3 to 8 years, depending on the state you live in. All references to delinquent bad information on your credit report can be removed after 7 years, except bankruptcies, which can stay for 10 years.

Educate yourself about debt collection in your state. Know your states statute of limitations for taking you to court on debt. Some states have their own versions of the Fair Debt Collection Practices Act which are more strict than the federal version and may have additional requirements such as being licensed and bonded to collect in your state. Not all states allow wage garnishment, does yours? Some states have homestead exemptions against a lien being put against your home to satisfy a judgment. Remember, a lot of people say that is why OJ Simpson moved to Florida.

Good Luck

You need to get a pay for delete agreement, otherwise your score will not got better. Even if it shows "paid" with a zero balance, that old debt is still a derogatory mark and hurting your score.

If you get the listing removed completely your score should improve immediately.

Edit - Great post by Edward. He is correct in what he said.

The collector is correct. Creditors would rather take a chance with ou if you pay back the full amount. If they see "settled for less than full amout" on your credit report they know what to expect. Besides you have 2/3 of the money already. If you were in debt $20k with $1k to put towards it I might have a different answer

Send them a letter ask for a "Pay for delete" - you get them to agree in writing to delete the report on your CR if you pay x amount and settle the account. This can sometimes be done with settled amounts or they may require the full amount - either way the impact to your credit score is worth the time to write the letter and request it. If you go to creditboards.com you can find some sample letters.

Hi,
I used "Credit Solution" to settle my debt and improve my credit score.They managed to reduce my debt up to 58% .It's legitimate.I came across this company on NBC News Special Edition.Check it out here:
http://dwarfurl.com/8d4d6

Approach them with a "pay for delete" agreement. You can search such an agreement here on Yahoo Answers. This is a formally typed (and not signed) letter that is sent certified mail with return receipt requested, stating a total amount you are willing to pay for the debt being reported on your credit file.

You do not want to acknowledge the debt in the letter, just state clearly that your intentions of the agreement are for the both of you to part your separate ways, and have the collector/agency remove the listing entirely, upon receipt of your stated amount.

You need a signed letter back from them, indicating ALL of your terms, so that you can provide that they were suppose to hold up their end of the deal to delete the debt from the credit bureaus once you paid them....in case they do not hold up to their end. You can send this letter and the proof of payment to the credit bureaus if this happens, and they will investigate and delete the entry.

Search "pay for delete" on here, you will get a better idea about it, and also links to sites with pre-made letters that you can fill in and send out.

Settling the debt is not in your best interest....as others above said. If you can afford to "pay in full", then do so. If nothing else, "pay in full" what collectors you can, then settle the rest. A "settled" debt will stay on your credit file for the remainder of it's period of 7 1/2 years from the time it was first reported, and looks really bad to lenders (it shows you defaulted on a line of credit, and paid less than what was extended to you, to have it "settled"), so they know what to expect. At least with a "paid in full", you paid off what was owed. A "pay for delete" completely deletes any record of debt, and this will help your credit file and score over a short period of time.

As a quick note....as the debts get older on your file, they become less "valuable" to collectors. This means that your likelihood to repay the debt is less and less, and collectors value the debt at a less amount. When you offer a "pay for delete" agreement, use this to your advantage, and offer a lesser amount which would be commensurate to the age of the debt. For example....if it's a $300 debt, but is in it's 3rd year of collections....the debt was probably bought for a small percentage of it's value from a collector (e.g. 10-15%, depending on the age of the debt when they bought it)....so they may only have $30-$50 into the debt. Offering something like 30%-40% of the debts value for a "pay for delete" agreement would be considered, but not necessarily accepted.

I would avoid settling the debt if you can help it. Just pay it in full....if nothing else.

Pay it all off now if you can settle. But your credit score may take a year of more to improve, provided you pay on time.
Scores are important.

I personally would pay the reduced, settled amount on the cell phone bills.
On merchandise charged to a credit card, I would be more inclined to pay the full amount charged - but if reduction is on interest, I would at least be sure I had paid for the original amounts charged....
Your "lateness" has already done it's damage to your credit score anyway....

Settle, it does not matter when you pay. Just as long as it is paid. The same creditors that you settle with will turn right back around and extend you credit again.

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