Do you know how to prioritise your debts?
By Mr Bankruptcy
3rd March 2020
If you are in debt to multiple creditors it can be overwhelming, but knowing which debts to pay first can help you to clear them all quicker and therefore save you money.
What is a priority debt?
Priority debts are not necessarily the largest debts or those with the highest interest rates but are so called because not paying them carries the most serious consequences. These debts must be paid first and include:
- Council tax
- Gas and electricity bills
- Mortgages or rent
- Debts secured against your home
- TV Licence
- Court fines
- Child maintenance
- Tax, VAT or National Insurance
What happens if they are not paid?
Not paying off your priority debts could result in you:
- Having your heating or lighting cut off
- Receiving a court summons
- Being visited by bailiffs
- Your home being repossessed
- Going through the bankruptcy process
- Having money taken from your wages
You still need to consider other debts
In addition to priority debts you could also have what are often referred to as non-priority debts. These need to be repaid but the consequences of not doing so are less serious. Non priority debts are things like bank or building society loans, personal overdrafts, credit and store cards or overdrafts.
Understanding your debts can save you money
Knowing your debts means more than just knowing the amount to be repaid. You need to understand the cost of your debt by knowing the charges linked to it, for example, interest rates or late payment fines.
Once priority debts have been determined, repaying non-priority debts should start with the most expensive, but also be mindful of any charges there may be for overpayment or early repayment.
Still struggling to understand your debt?
Even when you feel you know what debts you have, it can still be hard to navigate the best way forward, clear your debts, remain focused on repayment, address the priorities and understand the creditor’s terms. Seeking specialist advice can help you to determine which debts to prioritise and how to effectively manage debt in a way that may save you money and help reduce anxiety about your debts.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors facing unmanageable debt or involved in civil or commercial disputes.
Our services include:
● Insolvency support
● Negotiated settlements
● Personal assisted bankruptcy
● Mediation
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Find out if you qualify for a free consultation
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.