Better Salary -- Paying off Debts?

  1. Hi all,

    I am a new RN as of 5/19. Now that I have a better job and literally do not have to worry about where my next meal is coming from, I REALLY need some financial advice. I have horrible credit, I was never responsible and always spent too much and borrowed too much and defaulted on pretty much every loan I have ever had. Now that I am making more money, I want to turn over a new leaf and be more responsible. For the first time in my life, I can pay my rent, utilities, insurance, feed myself and have money left over. At some point in the future, of course I would like to buy a house. I have looked at my credit report, and alot of the charged off debt is going to be dropping off in the next couple of years. Last week, I received a couple of letters from debt collection agencies wanting me to pay on that older debt, which I could easily do. Someone told me if I paid that debt, it would be on my credit report for longer than if I just let it drop off of my report. Should I pay it? What are the results of paying or not paying? Should I try to dig up the rest of that charged off debt and make arrangements to pay it off? Sorry for the long post, but I have been REALLY poor for a LONG time and I'm pretty stupid about all of this ... What is best for my credit?
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  2. 6 Comments

  3. by   Tweety
    I don't know what's best for your credit. I would think it would be better for your soul to pay your debts if you can afford to pay them. It might not be the easier softer way, but it's what's right. You stacked up the debt, you pay them.

    I couldn't sleep at night if I could afford to pay off something and didn't.

    Do what's right and good for the soul. Cleaning up the past is the best way to get a clean slate. The credit will take care of itself. Just my opinion.

    Congrats on everything!
  4. by   MrChicagoRN
    Quote from crbetts
    Last week, I received a couple of letters from debt collection agencies wanting me to pay on that older debt, which I could easily do. Someone told me if I paid that debt, it would be on my credit report for longer than if I just let it drop off of my report. Should I pay it? What are the results of paying or not paying?
    Should I try to dig up the rest of that charged off debt and make arrangements to pay it off? Sorry for the long post, but I have been REALLY poor for a LONG time and I'm pretty stupid about all of this ... What is best for my credit?
    Find a legit non-profit credit counselor. They can best give you the best advice regarding this type of issue.
  5. by   Shmuela
    If your trying to help your credit, let it drop. Like it or not, that's how the game is played. If you actually make an effort to pay it and even succeed the charge off will remain on your report for another 7 years.. it's idiotic.
  6. by   caliotter3
    Follow MrChicago's advice about speaking to a legit credit counselor before you make your decision on what to do. The statute of limitations comes into play, (typically four years for credit card debt), although technically the debts are still owed. But wanted to warn you of one possibility, particularly since you are getting letters from the debt collectors. Some debt collection agencies will illegally sue you for the debt and obtain a judgement by falsifying the last contact date and changing the statute of limitations date. The lawsuit can proceed without anyone bothering to notify you, a process server will commit perjury about serving you, and the judgement can be collected before you know what is going on. That is why you need to start getting a copy of your credit report on a regular basis and keep an eye on what is going on. If you decide not to pay these debts, this is the chance you will take as long as the debt collectors have your debt on their books, even though the debts will fall off your credit report after seven years.
  7. by   oinch97
    As far as actually improving your credit (which is what I have started to work on), you can try getting a "secured" credit card, where you pay a deposit which would then relate to your credit limit for the card. Only use it once every 1-2 months for something minor like gas or something else maybe $40 or less, and pay it off as soon as you get each bill. Keep an eye on your credit report and slowly you will notice things beginning to improve.
    As for the old debts.... follow your conscience as you consider making payment on them. If you do pay, make sure you have documentation of payment, especially if you have paid in full or take a "settlement" offer. Ask them to provide something in writing that the debt is paid in full. Oh, and some collection agencies can be, shall we say less than honest, so never provide them with bank account info or anything that could give them access to your paycheck. Be sure of what the laws are in your state as far as debt collection and the statute of limitations for the type of debt you have.
    It can be a really rough road, but regaining your financial integrity can be nearly priceless.
  8. by   nursefrances
    I know this is an older thread but I just stumbled upon it. Two years ago my husband and I started listening to a radio show about how to fix your finances and we have really turned things around since then. The radio show is by Dave Ramsey. He was in real estate years ago, made lots of money, spent lots of money, eventually went bankrupt and lost it all, learned from his mistakes and now 20-25 years later he has a radio show and many books about finances. He is a regular guy with simple, old fashioned advice: Don't spend more than you make. Pay cash for everything. Don't use credit cards. When you have money, spend some, and save some. You can listen to his radio show free on Daveramsey.com. Our CPA/Financial planner/good friend gave us Dave Ramsey's book "The Total Money Makeover", this helped us alot too. I get turned off by "By my system/By my book, it really works" kind of stuff, but the website/radio show is free and you can learn alot. Other than the one book we have we have not bought anything, we just listen to the free show and we have read the one book. He has an envelope system (to divide up your paycheck for bills/expenses. We just used envelopes we already have and wrote on them. The envelope system took some discipline but it really helped us save money much quicker and not spend blindly. He says to assign evey dollar you make, give it a name ( example: I hade envelopes for utilities, food, gas, dog grooming, hair cuts, christmas, oil change/car expenses, etc. I even had one for me, you need to spoil yourself a little just with control.) He also has a smart phone app where you can listen to a lot of free advice.(just search Dave Ramsey in the app store.) The cool thing is that every Friday people call in and give a "Debt Free" scream, those who have finally paid off all their bills and are truly debt free. If all works out well, we will be there in 6-8 months.
    We have paid off our cars, pre-pay our car insurance every year, paid off almost all credit cards (only one left! Used these alot when I was in nursing school/not working and really got in debt). Now we are saving to buy a home (sold the old one, kids are getting older..too big a house and payment...saving now to get something smaller and less of payment) and our only debt is the one last credit card and one small student loan. Can't wait to do the debt free scream.
    I hope this helps someone like it helped me.

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