Minimizing damage during pay off processes

[sophali]

Hi there!

We are at the top of a precipice and I'm not sure how to handle it. My husband and I have had payment troubles off and on for the past three years, our credit scores are in the mid 500s. We were getting on track with on time payments, and then had to move twice due to some job stuff.

Right now, our student loans are deferred - we have three credit cards (all totaling less than $1200) and a variety of medical debts/old utility bills. Our income fluctuates because I am self employed, so we may be able to put more toward debt once the new year comes around.

All in all we are about $30000 in debt with student loans.

My main concern is whether I should put small payments toward all of the old debt, or concentrate on paying off a few entirely and letting the rest ding the credit? Counting up now we have the three credit cards (one has just been sent to collections), two medical debts (both in collections), three old utility bills (also in collections). Our current utilities are a bit behind, and we have a settlement from an old landlord that we are paying off (that has not been sent to collections) - so those are our top priorities.

How can I get out of this with minimal damage? I know that we'll likely need a lot of credit repair afterwards and are in a hole to begin with - but what will minimize any further digging? Concentrating on something high interest (like the credit cards) or trying to pay off a little across the board?

Thank you!!

[chane]

How old are the debts? Are any of them past the statute of limitations?

[sophali]

One may be - I live in California and it's 4 years. I think my oldest Comcast is at least that old. But the rest are within the last 2 years with the vast majority in the last year.

I just rewrote everything down and it looks like there are 10 major bills, 3 of which are credit cards and 1 of those credit cards is now in collections. If I have $500 earmarked for next month - should I spend the $250 it will take to get the 2 non-collections credit cards out of the danger zone, and then put the other $250 toward the 7 debts (like $35 each) to show that I am paying as I can - or just split it evenly and send $50 to each?

Or send $250 to the 2 non collections cards and then $250 to pay off one of the debts entirely?

Thanks!