First Christian Church

Debt Priorities: Which Debts Should Be Repaid First?

By Benedict Smythe

If you are having a financial setback and faced with many debts, one way to ease your financial burden is to prioritize payment of your debts. Take note that some debts are more essential than others. Thus, you should pay immediately the essential debts and the less essential ones later, lest you suffer other serious consequences.

House Fees

If you are renting a house, do not let your rental fees slide. You have to make your rent as a top priority unless you are ready to move out of the house and actually have a new house to move to. Keep in mind that it is not easy to find a new house and to move all your belongings once your landlord decides to let you go.

In case you are paying monthly mortgage, you have to prioritize it if you do not want your house to be repossessed or foreclosed. However, you can also consider selling your house to someone willing to take over your mortgage. In analyzing whether to sell your house or not, you should carefully compare your mortgage payment to the rental fees. You have to take into account that selling your house means giving up an investment that you have worked hard for.

Utility Payments


Other than the roof over your head, housing utilities are necessary for comfortable living. These utilities include electricity, water, telecommunication, and gas. If the utility companies cut their services because you fail to pay your bills, you will definitely suffer. Living in metropolitan areas makes these utilities absolute necessities.

Child Support

This is essential since this is your responsibility as a parent. Lapsing on child support may result to your child’s dropping out from school, malnutrition, and other far worse consequences. Moreover, child support debts neither expire nor get invalidated once you file for bankruptcy. Such is a responsibility that you cannot escape from. You have to realize that if legal actions are taken against you, you can immediately end up in jail.

Tax Files

You have to pay your taxes on time. If your tax debts pile up, the IRS can actually take all of what is left in your bank account and your paycheck. And if these are not enough to cover all your tax debts, the IRS can also take your house and other properties.

Car Payment

A car payment is considered an essential debt only if you absolutely need your car for your job or for your day-to-day living. If not, you have to consider selling your car before it can be repossessed. Once you sell you car, you can use the money to settle your other debts and buy a cheaper car.

Secured Loans

If you have loans secured by your house, car, or other important properties, you have to prioritize paying these loans. Keep in mind that creditors can easily take these properties. They can also sue you. You will end up with getting court judgments and bad credit reports. Repossession and missed payments can appear in your credit report for seven (7) to ten (10) years.

About the Author: Real Claims and Consumer Credit Claims are a group of solicitors dedicated to miss sold loans and payment protection insurance.


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