I am a recent graduate from the U.S. with a checkered credit history. I have a few items in collection now totaling about $750 or so. Previously, my attitude would have been to let these slide until enough time has passed, but I've been taking steps to not just be responsible with my money. I want to sow the seeds so I can look into investing down the line, and really turning my extra money into a proper nest egg/savings/retirement -type thing.

So like I said, I have 3 things in collection coming to about $750 or so. Now that I am making enough money to put a sizable distance between my living expenses and what I'm seeing, what would be the ideal way to go about settling these debts in collection? I'm thinking I can either take out a loan from my bank to consolidate it and pay it back, or knock them out one at a time at a rate of maybe one a month. I've got a bit of time before my employee benefits start cutting into my paycheck, as well as some time before my student debts start collecting interest, so I'd like to take advantage of this while there's more breathing room. * edit: these debts are legitimate, so I cannot dispute them.

Thank you all in advance. I really appreciate any feedback, since I'm kind of new to learning all of this financial literacy stuff and I've been lurking here enough to feel that I'm in good hands.

  • Its $750, just pay the dumb things off.
    – Pete B.
    May 5, 2016 at 12:16
  • Even if you now have a professional job, I would strongly urge you to get a second job; so, work all weekend (every single hour possible) at McDonalds every weekend all year for a year. "Face up to yourself" that you've previously been frivolous with money. Don't fall in to the trap of suddenly needing a "jet ski" or the like since you've finished college and got a first job. Keep yourself busy by working all weekend, while you're young and single and can do it. You'll feel better about yourself every single week as your bank account grows.
    – Fattie
    May 6, 2016 at 16:33
  • Good advice Joe, I already do work on the side during nights and weekends when I can get it. It usually goes straight into savings, but isn't as consistent as I like. I'm working very hard to avoid falling into that "rich guy needs nice things" trap. I recognize the money is mostly substantial because of my very low overhead, so I'm staying pretty well-grounded.
    – jaichele
    May 9, 2016 at 13:25

1 Answer 1


Since you acknowledge that you legitimately owe this money and the debts are relatively small, you should pay them without trying to settle for less.

Don't bother with a consolidation loan for these. The loan, if you can get approved, would be more trouble than it is worth, at the time frame you are looking at. Just pay these off in full as fast as you can. Once you do that, your credit will start to heal.

Get a written statement from the collectors to ensure that you and they are in agreement on exactly how much you owe. When you pay them, don't pay electronically; use a check. (Debt collectors have been known to clean out bank accounts if you set up an electronic payment.)

After you've cleaned these up, I would encourage you to aggressively tackle your student loans and any other debt you have. Now, when you are starting your career, is the time to dig yourself out of the hole and eliminate your debt. This will set you up for success in the future.

  • outstanding advice about paying using a cheque.
    – Fattie
    May 6, 2016 at 16:28
  • I heard cashier's check or money order was the best way to go. Would a personal check be just as good?
    – jaichele
    May 9, 2016 at 13:26
  • @jaichele Many debt collectors are less than honest. This is why you need to make sure everything is in writing before you pay them. An electronic payment is no good, because it is too easy for them to charge you more than they told you they would. If sending a personal check to them makes you nervous (a reasonable concern, IMO), go with a cashier's check or money order.
    – Ben Miller
    May 9, 2016 at 13:31

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