I'll start off by stating that I walked in your shoes, joining the school of hard knocks at that time, and then picking myself back up with lessons learned. From that day, I learned to never place myself into that position again, and to learn as much as I needed about finance and credit card debt, along with the concept of building a solid credit profile. I learned how money is actually created, from start, down to the deployment into the world as we live. When you are low in life, and you crawl out of that gutter, I believe you will ferociously protect that credit score and profile you built up the second time around. You learn not to do what you had done before. I find these people to become the most aggressive and most protective of their scores.
The collection debt totals you mention of 8k, multiple it by four (4), and that's where my low was. Where I am today, night and day different. Today, I'm built like a tank based upon that school of hard knocks education.
The first thing you do is to evaluate where we are economically, and you financially within your life. Do we have a great or decent economy, and do you have a job? Do you have a job that pays an ok to respectable income? Why does this matter? First, it identifies whether the conditions of the economy are good or bad. Today isn't bad, but in 2001 or 2008 it was, where people across the country lost their jobs for years, yes more than 12 months and upwards of 24 months within my sphere of influence and industry. There are silver linings in everything, to do things you couldn't do while times are good, and the stuff you could do back then, were opportunities to legally settle or delete debts among all credit card lenders. There were vasts amount of people out of work, and a mountain of debts to collect upon. These are avenues that are still in play today, but you wouldn't be able to do so easily today due to the economic factor. This is not then. I believe another repeat of 2008 is coming that will become significantly worse, but today is not that day, nor is it calamity.
So, if that's likely out, what comes next? How is your job and your ability to repay a debt?
I learned in my late teens, not knowing much about much, while holding a manageable debt load spanning a few cards...
I targeted the easiest to pay off card as a first priority, paying what I could reasonable afford more than minimal, and then the min on the rest. Then after payoff, I could then apply that current payment from card one, plus that second card payment to pay the second card off faster. Then, I would take the payment of card one and card two, and apply it to card three, increasing the rate of pay off. It accelerates the payoff speed across however many credit cards I had at that time.
It's my opinion that with your current debtload, you won't want to try a settled in full, or delete method, to risk the score for seven years. You certainly don't want to file for bankruptcy, so the best plan is to dig your way out of this one naturally. Your credit score will eventually reflect an increase, when you first continue to make payments on time, and you start to extinguish debt. Paying on time is your greatest weapon, to open doors to something better.
I had no parents to teach me this stuff, so I learned on my own. After all the nonsense, we replicated this to our youths, and they came out of the gate with 800+ FICO scores, protecting and building on a profile with that as starting point. They're well on their way today, so much faster than where I came from. In another example, very high 500's candidate, questionable payment history, we gave them some guideance, they paid off some lingering debts, and corrected the non-payment issues. Lent an 800+ AU status that did not help them, since they already had an established profile. Brought the score up to about 760 or so, but their profile was still deemed "very thin". The FICO score isn't the only metric used, it's just a visual. Lenders want to see reliability, depth, pay on time, and utilization But, at the end of the day, they re-established a responsible debt payment system, and acquired a new credit card, and auto loan. Now they're expanding towards building a better credit profile today.
I say what you do today, the work you put in, will reward you in ways so much greater to you later in life. Pick yourself up, and I'd say pay that debt down, card by card. In enough time, none of this will matter to you. You will grow into the next best opportunity.
$XXX,XXX in credit lines. First digit isn't a one or two.
4-5 weeks in free credit reward vacations, booked through 2028.
$X,XXX in bank rewards in only 12 months.
I like FREE...
800+ FICO.
Making all numbers dance on a financial ledger.
Abuse that score responsibility for maximum gain.
