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Prioritizing Your Debt The New Game Changer

When you are prioritizing out how to pay your debts, you need to sort out the essential ones. These debts as priority debts and it should be settled first. Various debt management companies suggest you to pay off the following debts ASAP.

Before jumpstarting further, let's understand the meaning of priority debts. These debts are the ones against which you need to take a serious action. Various debt management companies consider them as prioritized debts.

Mortgages and Secured Loans

Add mortgages in your debt management plan because these are the loans that are secured against your house. If ever, you are unable to pay such loans, the lender can resort to legal course against you or he may take possession of your house.


If you don't pay rent on time, then landlord can take action against you and can evict you. Hence, many debt management companies suggest you to pay your rent on timely basis.

Tax, National Insurance and VAT

These are quintessential expenses that you need to pay. If, you are not paying taxes on regular basis, it could lead you to become bankrupt, then you may either have to file a case with the court or you have to take resort of debt management companies.

Tax credit overpayments

If you have been paid overpaid tax credits, you are liable to refund the same. If you are not able to pay the most essential expenses like rent, gas, electricity bills, you need to explore your options.

Council Tax

Another tax that you need to pay is council tax. If, you think that you're going to have problem with paying off your bills you must discuss with the authorities. They can reduce your payments. For instance, you might be able to enjoy council tax benefit or discount that you were unaware of.

Utility Bills

Utility bills are the priority bills that cannot be disowned. Gas and electricity companies can disconnect the connection; if you are unable to pay the bills.

Even a telephone bill comes under the priority list, if you need that to earn your income.
Water bills are also important bills that you need to pay off; you can include water arrears in the ambit of non priority debts.

Hire purchase debts

Hire purchase debt like buying your car under credit, buying a home under EMI, all these are essential debt that needs due attention.

Other priority debts

Other priority debts include

1. Business Rates

2. Magistrates' court fines

3. Maintenance and child support payments

Your business goods will be ceased and will be sold. If the court bailiffs found out that you still owe money to them, they can send you directly in the prison.

Other Non priority debts

Your debt management plan can consider this as non priority debts. However, it does not mean, you'll be secured, if you don't pay for it. You can still be taken to country court and order you to pay the amount.

It is essential that you get independent advice on how to deal with your non priority debts. Examples of non priority debts include

  1. Credit card and store card arrear
  2. Water rate arrears
  3. Bank overdrafts
  4. Bank loans
  5. Shark loans
  6. Amount borrowed from friends or relatives

These are quite a few ingredients about how to manage your debt effectively.