How should I pay off my credit card debt when I just received a lump sum of money?

I recently received a good amount of money from a work related injury and now have the opportunity to pay off the $20,000 of credit card debt I now have in collections. Should I just pay the complete amount I owe or should I settle with the credit card company to pay only 25% of what I owe. This debt has been in collections for two years. What option would be better in the long run? I figure I'm already so late on payments how much worst can my credit get if I settle.|||If you have the money, you need to pay off the debt in full.





I believe that when you owe people money, you should pay it. I never base financial decisions on what it might do to my credit score.





If someone owed you money personally, I think you would want them to pay you in full.





The only exception I could think of would be that if you are no longer capable of working, and this is the only money you may be getting.|||Agree with Lisa L. You've already been flagged as a credit risk (although you probably don't know it if you haven't applied for credit recently), so you should simply go ahead and settle the full amount. It's very unlikely that the credit card company will let you settle for a lesser amount, although it doesn't hurt to try.|||Your credit is already messed up.





If they are willing to settle, get a letter from them saying the debt will be satisfied and they will accept a lesser amount.





Get the agreement IN WRITING!!!





Your credit probably shows as charged off anyway...with you paying a settled amount, it should show as paid after charge off, settlement accepted, or something to that effect. Showing that it is satisfied will benefit.|||I'd just go ahead and settle with them. Your credit/Fico score is already in the toilet. Settle and save yourself some money. And DON'T get into that kind of debt again. Pay cash next time, with some of that money you have. Put a chunk into savings too, don't fritter it away.|||Whichever is best for your credit. If you settle for a lesser amount, I don't think it affects your credit any more negative than if you pay the full amount. If it's paid, it's paid. And that should be what shows on your credit report???|||good idea to try and settle. if they would settle for 25-50% that would be a nice break for you.





the settlement will be a ding on credit report but probably not much worse than has already occurred.