Goal: Getting Out Of Debt
Initially, I would check to make sure that current accounts (those not in collections) have been paid. This would include cell phone bill, rent, car payment/insurance, utilities, health insurance, etc. After making sure that current accounts were updated, I would then focus on older accounts.
The first step in resolving past debt would be take a look at my credit reports. That way I could see all the information needed to get everything taken care of. I know from experience that credit reports provide information about the creditor, important dates, status of the accounts, and contact information that is very crucial in getting in touch with collection agencies and businesses. The next step I would take is to contact each creditor, ranging from oldest to most recent, and set up a payment arrangement. Creditors are usually tactful about setting up payment arrangements so that the customer is not required to pay the balance in full. One thing to take into consideration is that creditors, in most cases, will allow one to settle outstanding balances (in other words, to take a percentage off the balance). However, as far as credit score and creditors are concerned, it ultimately improves overall credit score to pay the full balance verses settle your account.
Getting out of debt is not something that can be done over night but is achievable with time. It is important to set aside money to pay bills on and then have money to live on as well. Monthly payments should be based on your current income and how much you can afford without being overloaded with how much you can pay.