Christmas has come and gone, the snow remains and for so many of us… so does the debt. The economy is still in a slump, record numbers are unemployed and are now left with unmanageable debts. For many it seems that there is no light at the end of the tunnel. For an increasing number poor credit ratings are becoming the norm, and poor credit coupled with increasing debts can limit the options available to those wishing to climb out of what has become known as “the spiral of debt”.
There is no need to despair! You stand a real chance of climbing out debt. The key is to prioritise your debts, Priority debts are ones where should you fail to pay that debt, action may be taken against you.
Top of many people’s priority list will be the mortgage. Failing to pay your mortgage will result in a poor credit rating and may result in repossession of your home…. Always pay this debt of first. If you are Renting then it is essential to pay your rent before other debts – should you fail to do so your landlord can evict you and may take you to court for the money you owe – which would further damage your credit rating.
Tax – failure to pay tax can lead to you becoming bankrupt and/or going to prison.
Utility bills – Gas and electrical companies can (and probably will) disconnect your services should you fail to pay them. Telephone companies will disconnect you, and…If your income relies on you being connected this can render you unable to make the money to pay the rest of your debts.
Non priority debts
You may not lose your home or go to prison if you fail to pay these debts but you can still be taken to court and forced to pay what you owe – often incurring extra cost along the way.
Examples of such debts include
• Credit cards/ store cards
• Catalogue arrears
• Bank overdrafts and loans
• Money borrowed from family or friends
• Non essential goods bought with hire purchase