Rebuilding Your Credit

[jamie123]

I'm perfectly okay with you paying your debts and think you should in fact do so. I just think that you should pressure them for a PFD first. Pressure them a lot actually. They will always be there to accept your money when you decide to pay them. Anybody can just pay off their bad debts, you are here for advice on how to repair your credit and raise your scores.

If the negative information isn't removed from your reports it will take years for your scores to recover.

[Shogun]

+1  Try for the PFD, if you can't get it, worst case scenario is you still just pay it and try for a GW.  But it is better if you can just get them to do a PFD.  

[atarvuzdar]

I definitely agree with the PFD approach, but even if some of the accounts don't agree to the PFD I would consider paying the debt off--especially if you think you may be sued. In your original post you mentioned putting 38% of your income into a 401(k). I don't know how much that comes out to be, but just remember that there is a cap on the amount you can put into a 401(k) every year. If your 38% of income goes over that capped amount (sorry, I don't know it off the top of my head but your employer's HR dept or a quick Google search will give you details) I would definitely cut back on the % that you contribute to the retirement plan and put that $ toward your current debts.

You've come a long way already and are on the right path. Good luck!

[sphinx313]

38% of my modest income is around 15k. The cap is 17,500 I believe. I do not cap out but i come close. I was thinking of maxing Roth and putting rest in 401k but that's another story. I think I'm going to cut back to a still healthy 20% while i attempt PFD's and start paying down the debt. It will hurt less at tax time as well. Thank you for the kind words.