How to prioritise your debts

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In an ideal world, your monthly debt repayments – whether that means credit cards, a mortgage or other types of debt – would never be a struggle to meet, but when times are hard it can be too easy to find yourself looking at more payments than you can manage to meet.

If this situation sounds familiar then we recommend going to a charity or organisation such as the Citizens Advice Bureau for free help and advice. In the meantime, though, you may want to think about prioritising your debt in a way that allows you to pay back the most serious debts first.

Council tax, child maintenance and court fines

If you have debts in any of the three areas listed above then these should almost certainly be your top priority, as the consequences of not paying can be far more severe than with other types of debt – including, in some rare cases, imprisonment. More common consequences could involve a visit from the bailiffs or a deduction from your wages.

Enforcement of these types of debt can be extremely serious, so wherever possible you should try to avoid Government debts. The consequences of not paying these debts can also lead to ongoing financial struggles, as wage deductions could lead to you struggling in other ways.

In order to get on top of these debts, then speak to the relevant government body about putting a payment plan in place. For instance, if you are struggling with council tax then you should try speaking to your local council directly.

Mortgage or rent payments

Your mortgage or rent payments put a roof above your head, and getting yourself into arrears could mean repossession or eviction. Keeping a roof over your head should always be a priority, so work with the bank or landlord to try and find a remedy as quickly as possible. You should be open and honest with your landlord or lender, explaining why you have missed payment.

If you’re able to arrange making your usual monthly payments plus an additional amount to spread the cost of your arrears, then this may be a suitable solution. If you’re unable to do this, seek additional specialist advice.

Utilities

Debts surrounding utility bills such as gas, water or electricity could lead to your supplies being cut off, leaving you without essential services. In some cases, it can also lead to money being taken from your benefits, or to a County Court Judgment being made against you. As with mortgage or rent payments, your first port of all should be to speak to the lender and try to come to an agreement with them.

Unsecured credit

Unsecured debt such as overdrafts or credit cards are usually referred to as non-priority debts because the consequences will be less severe – you won’t lose your home, face imprisonment or lose essential services. While you should still aim to make minimum payments every month, this means that they are not as high priority as the other types of debt.

 

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