What to pay off first?

[hopefulKT]

Combined, my spouse and I have  credit card debt totaling just under $5,000. However, I also have 2 CC accounts that have been CO (2 years ago) (but not sold to a CA) that are showing delinquent on my report with a  past due balance (total for both is around $1,800); one of them reports 120+ days past due every month, the other hasn’t reported in 2 years. I also have 4 CA’s on my CR totaling around $3,000 (all are 2+ years old); but all are also with SOL. I’m getting ready to get a small bonus from work and I’m thinking that I should put it all towards paying the 2 CC’s that are delinquent but not sold to a CA. Good idea? Then, I can contribute $700 per month to CC debt/Collections. Now to my question, should I pay off my current CC debt first, pay collections first (after going through the whole DV, PFD process), or do a combination of both? CC’s are maxed out so our utilization % is awful. Hubby is already over the 640 benchmark for a USDA loan; however, I’m far from it. So, I’m in repair phase.

[annielorie]

Work out a PFD for the 120 day late that reports each month. Then start sending PFD letters to each CA when you have some cash in hand. Objective PFD Good Luck.

[RobertEG]

I would prioritize in terms of potential further damage, not simply current status.

Any debt within SOL can result in legal action.

Any CO can be referred for collection or sold to a debt collector, regardless of SOL status, resulting in the addition of a collection.

Paying CC debt above the min monthly necessary to avoid new delinquencies has the advantage of soothing current credtiors, and thus possibly avoiding actions on their part, such as a credit limit decrease, but apart from those considerations, arent currently leading to derogs, and can be dealt with later.  The collections and charge-offs have much greater likelihood of immediate escalation.  And inclusion of unpaid, delinquent debt, apart from FICO scoring, is likely to have significant impact on ability to obtain any future credit.

[hopefulKT]

Thanks for the advice; we currently have a good relationship with our current creditors (no lates)--we're just at 90% utilization. I'll work on the two CO's that are with the original creditors first; then start handling the CA's; and gradually pay down our current CC's after that. 

[hopefulKT]

The 120+ day late is unfortunaltely with Bank of America (it hasn't updated since 2009); from what I've read, a PFD is pretty much impossible. So, I'll try, but will probably just end up paying it and trying for GW after. The other 120+ day late is with Chase (it updates every month); I've read that GW's are very successful after payment to them. Crossing my fingers.