I deal with credit all day long. If it's already screwed up don't screw it up any more so you can slowly repair it. It take 7 years to remove collections and they still stay on your report even after you pay it until 7 years from the point it was filed.

If it's just lates they will be reporting for 2 years. So, I would just pay it because I can find another deal on Craigslist in a few more months when I can afford to splurge.