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How to prioritise your debts – which debts it is important to pay first

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When you’re in debt, it can be difficult to know where to begin. It can be tempting to try and pay back the biggest debts first, or to spread whatever payments you can make equally across all of your creditors.

 Some debts are more important than others, though, and it’s not all about how much you owe. Some kinds of debt can lead to quick or unpleasant circumstances if they are left unpaid, even if it’s a relatively small amount owed. Below we’ve listed some of the most important common debts, according to our experts:

Mortgages and loans secured against your home or property:

Whilst lenders of unsecured debt can be more aggressive and threatening when demanding payment, not making payments on debts secured against property can lead to you losing your home. If you’re struggling to make payments, speak to your lender and get expert advice from a debt solutions company on how to make your payments more affordable.

Utility and power bills:

Power suppliers can cut off your gas or electricity if you miss too many payments. Discuss your situation with your lender but be cautious and prepare what you are going to say in advance: utility companies know that they supply essentials and so will often use this leverage to demand payment plans that leave the person in debt struggling to fund other debts. If you have any doubts about how to proceed, please seek expert help.

Council Tax Arrears:

The council can take payments directly from your wages or benefits, send bailiffs to your home, or even send you to prison if you fail to make reasonable payments.

Child Maintenance Payments:

This isn’t just an important payment to make for your children’s sake: if you are a part of an agreement with the Child Support Agency or the Child Maintenance Service, payments can be deducted from your wages or benefits, bailiffs can be sent to your home, your driving license can be suspended, or you can be sent to prison for up to six weeks.

Magistrates Court Fines:

Failing to make payments on court fines can lead to bailiffs seizing your property or possible time in prison.

Income Tax & National Insurance Arrears:

Aside from the threat of bailiffs or imprisonment, if HMRC think there’s no chance of getting payments from you, they may start bankruptcy proceedings.

Whilst the consequences of not paying these debts are severe, help is available. The arrears of many of these debts can be included in an IVA agreement, which can help you to be debt free within 5 years. For help, support, and expert advice please contact Hamilton Price on 0800 088 2599 or 01282 218218.