Think about your finances as a whole; do you have several debts you are trying to manage, does it feel unmanageable? It’s important you prioritise your debts in order of the consequences of non-payment.
Priority debts are those that have the most serious consequences if you continuously miss payment; they aren’t always the largest debts or those with the highest interest rate, but could lead to imprisonment, the loss of essential services for living or your home. These could include, in no particular order:
- Mortgage payments and any loans secured against your home
- Rent and council tax
- Child support and maintenance payments
- Gas and electricity bills
- TV licence payments
- Certain payments ordered by the courts
Non-priority debts are those where the outcome of failing to pay is often less serious. For example you cannot be imprisoned and you won’t lose your home, but your creditor may eventually take you to court. These could include, in no particular order:
- Personal loans
- Credit cards, store cards or payday loans
- Any unsecured loans
- Money borrowed from family or friends
If trying to make sense of your financial situation feels overwhelming or you need more support, speak to someone. You are not alone; a debt adviser at an organisation that offers free independent financial advice speaks to people in similar situations every day.