Which Debts are Most Important?

August 31, 2018 11:30 am Published by Debt Free Life

When you owe money to multiple creditors, deciding which bills to pay first can be confusing and often overwhelming. However, some debts are more important than others, and in this blog, we will outline exactly which bills you should pay as a priority.

If you are facing unmanageable debt and are ready to reach out for help, give debt free life a call. Our friendly advisers can offer support and, after receiving a little bit of information about your finances from you, we can start the process of entering you into a debt solution.

To begin your journey towards a debt free life today, give us a call on 0800 808 5124.

What Bills Should be Paid First

From most important to least important, your priorities should be as follows:

  • Utility Bills
  • Mortgage and Rent Payments
  • Council Tax and HMRC Debt
  • High-Interest Loans and Credit Card Payments

What Bills Should be Paid First

Utility Bills

When it comes to debts to private companies, there is only so much that they can do in order to retrieve their money. They have no access to your bank account and will eventually have to take you to court.

Naturally, this can have incredibly harsh repercussions, but the danger is not always imminent. Energy companies, on the other hand, can very quickly pile on incredible amounts of pressure.

If you do not pay your energy bills, they will simply cut off your supply. If you ignore one bill and the subsequent warning letters then the lights will go off and the heating will not work.

Before doing anything else, make sure you pay your utility bills.

Mortgage and Rent

The same rule that applies to utility bills applies to mortgage and rent. These companies have options have options available to them that other businesses, like credit card companies, do not have at their disposal. If you can’t pay your mortgage or rent, then you will lose your home.

The process of the bank seizing your home after failed mortgage payments, or the eviction process after missing rent payments, will not be instantaneous. Nonetheless, it is difficult to reverse, and in many cases, it will merely be a matter of time before you have to pack up and get out.

To stay in your home, you have to make sure your mortgage and rent payments need to be paid as a priority.

Council Tax and HMRC Debt

As we mentioned, private companies have to take you to court in order to retrieve the money they are owed. Although they can make your life incredibly stressful with mounting interest and charges, as well as sending constant letters and making continual phone calls,

Government bodies, on the other hand, have a number of powers at their disposal in order to gather the cash which you owe them. For example, local councils can take away your right to pay council tax in instalments and demand that you pay the total for the year in one go.

Additionally, the government has the ability, and right, to take money directly from your bank account. This will make it difficult to manage your other bills and can leave you in a position where you cannot do anything to stop your other bills rising.

In extreme cases, not paying your HMRC or council tax will lead to a court case and a possible jail sentence. Once you have your energy bills settled, make sure you give the government all the money they are due.

High-Interest Loans

Once you have paid off all of your debts which can have very immediate and severe repercussions, there comes everything else. At this stage, you should pay off your remaining debts depending on the associated interest rates and fees/charges.

High-Interest Loans

If you have a low-interest credit card, for example, and a high-interest payday loan, the loan should take priority. If you have two credit cards with the same interest rate, but one has steep fees and charges, then you should pay off the one with lesser charges first.

However, if you have a debt which has gone on for so long that you may be forced into bankruptcy, or asked to enter into a court case, naturally this should be paid off as quickly as possible regardless of the cost.

Need Help with Debt?

At debt free life, we help thousands of people each and every year to tackle unmanageable debt and take back control from their creditors. With just a little information, our trusted advisers can offer a solution to your financial troubles and guide you through, offering support each and every step of the way.

With a vast number of formal debt solutions at our disposal, you may be able to write off as much as 80% of what you owe while paying back a single reduced monthly sum. In addition, creditors will be legally prohibited from contacting you by any means throughout the entire process.

To begin your journey towards a debt free life today, give us a call on 0800 808 5124.

Alternatively, fill in our debt calculator, and one of our knowledgeable advisers will give you a call at a time which suits you.

 

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