Which is best to pay first: Debt that has gone to collections or high interest consumer debt?

[doran]

We are trying to get on the right side of our finances. My husband has a couple debts that have gone to collections but we also have a lot of consumer debt at an interest rate of 29.99% that needs to be paid off. Is it best to pay off the consumer debt first since the debt in collections is already in a "worst case" scenario?

[aswynn81]

You should have considered your long term financial viability before committing to long term products or services. The first thing you should do is cancel, return and stop your cell phone service. Find an alternative to cell service. The next thing you need to do is return as much of the stuff you can, you need better shopping habits. You need to focus on spending habits, that means intervention and possibly some form of 12 step process, overspenders anonymous.
Bankruptcy would not be a bad idea for you, chopping up your credit cards would be a great idea. Getting on a budget would be a great idea. Considering how deeply you have gone down the rabbit hole, you need a major change in operations before you can properly address your financial short comings.

[dacy17]

Taking care of your high interest debt should be the number one priority. As the collections are just that, already in "collections", I would address them last because they can't do anymore damage than what has already been done.

The high interest credit cards will keep racking up more debt if you don't start paying them down. To have more in collections will hurt your credit score more.

Start paying those down as soon as you can, and then work on the collections. It seems like such a chore, but how do you eat an elephant? One bite at a time. :-)

Also, remember you aren't the only one in this predicament. Thousands of Americans are facing the same thing. Just take care of business and recover the best you can. Good Luck!

[jerard]

Per your update, pay off the high interest debt first..Debt with interest this high is a real problem and if you just make the min. payments the actual amount that you owe will never go down. If this is a large amount of credit card debt that you cannot pay off all at once, then consider non profit credit counseling. They could probably get the interest down to around 10%. http://www.nfcc.org
Once these are paid, come back and settle the cell phone defaults.

How to pay non credit card defaults: http://catdadsblog.wordpress.com/how-to-pay-collection-accounts-on-your-credit-report/

[muata2]

If the collections accounts haven't gone to court to garnish your wages, then get those taken care of first. That will help to stop garnishments. Then get rid of those high interest cards.