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How to Manage Priority Debts Effectively

Any debt can cause stress and worry, but some are far more serious than others. And the situation is often compounded by spiralling interest rates and fees. If you’re struggling under the weight of a debt mountain, the first thing to do is prioritise all your debts — and pay them off according to how important they are.

HMRC debt management, for example, should always take priority over private debts. If you don’t pay back what you owe in the agreed timeframe, you could face huge fines, repossession and even prison time.

We’ve put together a few tidbits of advice to help you manage your priority debts.

Effective Debt Management

Managing priority debts
Managing priority debts

The first stage of effective debt management involves creating a list of your debts in order of their importance. The debts that involve the most serious consequences if they’re not paid should be right at the top of your list. DWP debt management and anything else government-related should be at the top of your list.

Just after government debt in terms of importance comes your mortgage and your utilities. These are vital if you’re going to remain safe, warm, and housed. If you don’t pay your gas bill, for example, you may not be able to keep yourself and your family warm.

Here’s a short list of some of the most important priority debts:

  • Government debt
  • A mortgage
  • Utilities
  • CCJs and court orders
  • Secured car loans
  • TV licence
  • Child support payments

Non-priority debts might include:

  • Credit cards
  • HP agreements
  • Digital subscriptions
  • Unsecured loans
  • Catalogue debt

Top Tips for Creating a Debt Management Plan

Managing Priority Debts
Managing Priority Debts

Whether you’re taking charge of your affairs or you’re looking for debt management companies to do it for you, it’s important to have a plan of action.

Create a budget

Once you have identified priority debts, create a budget based on your income and all your priority debt payments. Use what’s left to cover non-priority debt and everyday living expenses.

Reach out to creditors

Once you know how much you can afford to pay your creditors, reach to discuss your situation. Most creditors will be prepared to let you pay in instalments if they think you’re able. They may also be willing to freeze further interest and fees.

Deal with your mortgage repayments

If you’re struggling to keep up with mortgage repayments, voluntary repossession is an option. However, there are other options you should explore before considering this last resort. For example, you can ask us to buy your home for cash — a process that is often completed within 28 days.

Alternatively, you can ask your mortgage provider for a payment holiday. It may also be possible to stretch your loan out over a longer period to reduce the monthly payments.

Cut out the luxuries

Stop buying those lattes on your way to work. Cook from scratch more. Or switch to the basic satellite TV package. Look for ways to reduce your monthly outgoings — and be very strict about non-essential spending. When your debts are paid off, you could start using this money to go into a savings account, to have a safety net from falling back into debt in the future.

Ask for help

Whether you’re stressed by the whole situation or in need of practical advice, never be afraid to ask for help. This might involve reaching out to your GP for advice about depression or anxiety. It might involve talking to a friend. Or it may be a case of asking your local Citizen’s Advice office for guidance.

The most important thing you can do when dealing with priority debts is to be honest with yourself. Face up to the situation you’re in, and reach out. The faster your start controlling your debt, the faster it will stop controlling you.

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