You’ve probably heard this before from other sources but when you find yourself struggling to repay your debts it is essential to priorities which debts you pay back first.
Being smart about paying these debts back will not only allow you to keep your home, your car and your heating on but may also see you paying back your debts quicker.
Priority Debts
Stick these to the top of your payback list. Priority debts might not always be your largest debts or even the ones with the highest interest but the consequences of not paying them could result in you losing your home, your car, having your gas or electricity cut off or receiving a summary warrant from a sheriff officer.
The Money Advice Service mention the importance of dealing with priority debts. Some of which are listed below.
Priority Debts include the following:
- Mortgage, rent and any loans secured against your home
- Income Tax, National Insurance and VAT
- Council Tax
- Gas and electricity bills
- Child maintenance
- TV licence
- Hire purchase agreements, if what you’re buying with them is essential
- Court fines
What to do if you are struggling to meet payments
If you a struggling to make your repayments on priority debts you need to act on it. It’s easy to say (and also patronising), but if you ignore your debts they will not go away and your situation will get worse.
For this reason it is important to talk to the people you owe money to. They will appreciate that you have acknowledged you are struggling to keep up with repayments and are willing to address it. Many companies that you owe money to will be willing to freeze interest and charges to ensure you make regular repayments.
Organise yourself
Pull all your bills together and figure out how much you owe. Debt Therapy Scotland provide a useful budget planner tool that will allow you to see exactly what is going in and out each month.
From this they can provide you with advice on how much you should be spending each month on essentials. From this you can see what kind of disposable income you have and start prioritising the debt you have to repay.
Contact your creditors individually and negotiate a repayment plan
Most creditors will be reasonable if you explain your situation to them. So get in touch with them as soon as you start experiencing difficulties to see how you can work together to improve your situation. If this fails, there are still options in Scotland available to you.
Still need help?
If the above options don’t alleviate the situation it’s time to explore more formal options. If you are living in Scotland, Debt Therapy Scotland can help protect you against your creditors. This could be in the form of a Trust Deed, a DAS or a Sequestration.
The important thing to remember is, if you are struggling with your debts, act now. Ignoring it will only make your situation worse and reduce the options available to you.
