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A man thinking about which debt he should prioritise

Prioritising your Debt: What Should I Pay First?

Not all debts are created equal. Some debts are classified as priority debts because the consequences of not paying them are far greater than the consequences of not paying others. We know that having multiple debts can be overwhelming, and that’s why it’s important to know which debts should have priority over others so you can pay them first.

Which debt should be a priority debt?

Some debts have a higher priority than others when it comes to repayments. A secured debt will generally always be more of a priority than an unsecured debt, this is because the consequences for missing a payment will be much more severe if you fail to make repayments on secured debt. If you fail to repay secured debts, you may lose the assets that they are linked to – and usually these are essential assets like your home or car. Other debts, like Council Tax or legal fines, could leave you facing criminal charges if left unpaid. 

Prioritisation of debts is all about assessing what kind of debts you have and the consequences for missed payments or increases in fees such as interest rates. Below we have put together a list of priority debts and their consequences. This is, however, just an example and may not accurately reflect your current situation. Every person needs to individually analyse their debts and work out their unique priority list.

Priority List:

Debt                                                                      Consequence

Mortgage Repossession
Rent Eviction
Child Maintenance  Money taken from wage, visit from bailiffs or debt collectors
Utility Bills Disconnection, County Court Judgement visit from debt collectors
Council Tax A visit from bailiffs, County Court Judgement, visit from bailiffs or debt collectors
Car Finance Visit from bailiffs or debt collectors, repossession
Credit Cards Late fees, increased interest rates, court action, visit from bailiffs or debt collectors
Phone Bill Disconnection, visit from bailiffs or debt collectors

 Should you consider the size of your debt?   

It’s always important to consider the size of your debt when deciding which debt to prioritise. Although it may be tempting to try and reduce the size of your larger debts by paying more than the minimum required monthly payment, it will most likely be best for you, in the long run, to pay off your smaller debts that have much higher interest rates such as credit cards and store cards. By paying off these debts quickly, you will then be able to pay more than the minimum monthly payment on your larger debts that have much lower interest rates. 

Your larger debts like unsecured loans are designed to be long-term, therefore, paying these off over a long period of time is what is expected of you. If you happen to have an influx of spare cash that isn’t enough to repay all of your debts in full, you should use this to go towards smaller debts with higher interest rates.

What to do if you fall behind on payments

If you are in a difficult situation where you simply cannot afford to keep up with your minimum monthly repayments for all of your debts, you need to seek debt help now

When debt is unmanageable, there are debt solutions that can help you to regain control of your finances. No matter what level of debt you are in, there is always a debt solution for you. Take a look at the debt solution section of our website for information on the various options available to suit your needs or request a free callback for impartial guidance.

At Debt Movement we know that bad debt happens to good people. Our goal is to help you move out of debt and become financially free. Our team has helped over 35, 900 people become financially free. Request a free callback to discuss your debt.

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