How should I start paying on accounts?

[kman79]

Hello,

New member here and I'm in need of some credit help.

I have one semester of nursing school left, and because of school, I've dug myself a relatively deep hole in credit card debt.

I'm off from school this semester (issues within the school, not relevant to the problem), and will be working as much as possible the next four months in an effort to pay down as much debt as possible. I was wondering if there is a preferable way to pay down numerous credit cards? Should I PAY OFF individual credit cards one by one and pay minimum on the other credit cards? OR, Do I try to PAY DOWN all the credit cards to at least 50% of the available credit?

I'll be needing to rent an apartment this coming spring, and I'm trying to figure out the best way to help my credit look better. Does my credit look better by having more cards paid off, and have high balances on some? Or will it help me more to pay all/most of them down to 50% of available credit?

I'm hoping my question made sense. Any help with this is greatly appreciated.

[invza1]

I would pay each one down individuallly. This way your debt to income ratio will be better for each account. If you pay off one card at a time, your overall debt-to-ratio decreases but you are still high on individual accounts. Get all your accounts down to 10% as soon as you can for the maximum benefit to your FICO scores.

[freems4]

Let your creditors know your situation. Tell them that if you are willing to negotiate terms, or that you'll have no other recourse but to declare bankruptcy. Ask for a new and lower repayment schedule; request a lower interest rate; and appeal to their desire to receive payment. Faced with the prospect that you may resort to such a drastic step, creditors will do what they can to protect themselves against a total loss.

Indeed, many will negotiate away the farm before they'll write off your debt. As lawyers love to say, everything is negotiable. Therefore, what do you have to lose, except time? It's worth a try. And if you don't wish to do this yourself, organizations exist that can do it for you.

Here is a sample letter for you to use. Just rewrite it to fit your needs.

Today's Date
Your Name
Your Address


Attention: Joe Credit
Name of Debt Collection Agency
Address:
RE: Your {letter dated} or {phone call on date} reference account #: {place account or reference number here}
Dear Mr. /Ms. Joe Credit
According to my records the balance of this debt is $_____. I am not disputing this debt however; my current financial situation prohibits me from paying the amount you're demanding. I am able to make payments on this account every {insert date of month} to your company in the amount of $ _________.
I would appreciate a call from you confirming your acceptance of my payment terms. However, if I do not hear from you, I will consider your cashing or depositing my check as confirmation that you accept my payment terms. If you do not accept my terms then please return my payment to be returned to me immediately.
As a show of good faith I've enclosed my first payment in the amount of $________. If my financial situation improves enough for me to increase my payment amount I will contact you immediately. Thank you for understanding.
Sincerely,
Signature
Your Printed Name

[freems4]

Other that the letter I encluded in the first respley; This the first thing that I would do. Make a list all credit card debts, from the smallest monthly payment to the highest. On a Excel Spread sheet put date paid, Acount. Acount #, Balance. Start by puting all excess funds towards the smallest monthly payment's debt but continue to pay the minimum payment on all other credit cards. Pay on this card until it is paid in full. Next, tackle the second smallest credit card payment with all the funds that were being applied to the smallest credit card plus the minimum payment on this credit card. This is known as "snowballing" payments. Once a debt is repaid, the borrower goes onto the next debt but "pretends" as if the old debt was there, not changing his monthly debt repayment. This helps him to quickly pay off the largest and last debts on the plan.

Good Luck