Prioritising debts
If you have a lot of borrowing, then you should prioritise your debts and identify the most important ones so that you can pay these off first.
You will need to be able to identify all your debts, so be prepared to find all your paperwork. Make sure you know:
- How much you pay each month
- How much there is left to pay in total
- When the last payment is due
- Whether there are any penalties for early payment or making extra payments
This may sound daunting, but once you have done it, you will feel more in control of your situation. If possible, pay off the most expensive loans first, therefore releasing your money for paying off other debts or for saving.
Top tips
- When you are finding yourself in financial difficulties act quickly, don't put your head in the sand, it will only get worse.
- Try renegotiating debts with your lender to make repayments easier.
- Talk to you lender as soon as you feel there might be a problem - therefore avoiding bad credit ratings, county court judgements and worse!
- Be open and realistic with yourself and others trying to help you. That is the only way for the whole situation to be assessed accurately. Hiding things will only make things worse.
- Think seriously about using the services of commercial companies as they have to make a profit somehow, which will probably add to your financial difficulties. Obtaining free help and advice from say a charitable organisation will not suffer such commercial pressures.
- You may find that the financial pressures that you face appear to ease by taking the first steps of seeking help.
- You might wish to consolidate all your loans by taking out a single new loan to pay off several existing debts.