By now, I hope you will have registered with an agency to obtain your credit rating, so you should now have a clearer position of your financial position. (Clearscore/Experian/Noddle)
When you’re in debt, it is important to know exactly what type of debts you have (priority and non-priority), to know which, you should be tackling first.
It makes very little sense paying off a payday loan when you have missed TV licence payment, you may have got rid of the calls, and letters chasing the debt but that will be nowhere near as bad the prosecution, court appearance and a fine of up to £1,000 you might face it you don’t pay your TV licence.
Being aware of which debts you should pay first and understanding what happens to you if you don’t pay, should help to keep the roof over your head and you and your family out of trouble.
Priority Debts
These are debts where if you do not pay the consequences are serious for example you could be evicted for not paying your rent/mortgage or failing to pay your Gas or electricity leads to the disconnection of supply.
They include:
- Mortgage repayments
- Rent
- Utilities e.g Gas, Electric debts
- Child support and maintenance payments
- TV licence payments
- Certain payment orders by the court
Non-priority Debts
The outcome of failing to pay ‘non-priority’ debts is often less serious, for example you won’t be sent to prison for not paying non-priority debts and you are unlikely to lose your home or goods. However, you can be taken to court.
They include:
- Credit cards and store cards
- Catalogue debts
- Overpayment of benefits
- Money owed to family and friends
- Overdrafts and bank loans
- Loans to money lenders
You can pay as little as £1.00 per month is your income is low but you may need support to put this in place.
If you are having trouble paying your priority debts and/or your non-priority debts are really affecting your ability to pay your priority debts, then it would be a good idea to contact an organisation such as Step Change to get specialist help. (click on the word Step Change you will be taken to the website). They provide on line debt advice use their on-line tool to get tailored debt advice in about 20 mins. E.g. From the information, you provide it will produce an income and expenditure form which you can send out to your creditors so you can make more realistic payments.
This is the Start of taking control of your debts Good Luck.
TIP FOR THE DAY:
Start regularly saving or planning to save even if it is just £1.00 a week remember from ‘acorn’s mighty oak trees grow’
