How to prioritise debt

It's not always easy managing your finances, and it's perfectly normal to have some slip ups.

If you are behind on several payments, you may be feeling overwhelmed. Having several debts with different creditors can make it tricky to know where to start.

Here we explain how to prioritise your debts and get you back in control of your finances.

Why is it important to pay off debts in the right order?

It's really important that you know which to pay first, since some debts will have more serious consequences than others.

Not paying some debts may leave a dent in your bank account, some will prevent you from using a service while others might lead to court action. It's important to pay off debts in the right order so that you cause the least damage to your financial health and wellbeing.

Prioritising your debts can also help you to save money and clear debts faster.

1. Categorise your debts

The first thing you need to do is split your debts up into:

2. Handle debt emergencies

These are your top priority debts because they will have the most serious consequences. If you are facing a sudden emergency such as:

You should get seek free, independent debt advice urgently. Some charities which offer debt advice include:

A debt advisor will be able to explain your options to you, help you with what to do next and talk to the court, bailiff or creditor on your behalf.

You should always turn up to a court hearing if you have one, since it will give you the chance to come to an agreement. You will be able to explain your situation and put your case forward, which might help them reach a decision that works for you.

You can find more information on what to do if you are facing debt emergency here.

3. Pay off priority debts

Priority debts are debts which will have serious consequences if you don't pay them.

They aren't necessarily the largest debts or ones with the highest interest rates.

According to Citizens Advice, priority debts include:

You may find that there are other debts which could lead to serious problems for you personally. For example, if you need your car for work, then missing car payments could lead to a repossession of your car and have a knock-on effect on your job.

The consequences of not paying off priority debts could be:

We encourage you to access free debt advice if you are struggling to deal with priority debt, or if you have multiple priority debts and are unsure which to deal with first.

4. Pay off non-priority debts

Once you have got your priority debts under control, you should look at your other debts. Non-priority debts cause less serious problems if you miss them, though that's not to say that you can ignore them.

Many creditors will be able to give you breathing space on your non-priority debts while you deal with your priority debts. Find out how to ask your creditors to stop chasing you here.

Non-priority debts may include:

If you don't pay these, your creditors can take you to court in order to get you to pay. You can check what to do if you are being taken to court for a debt here.

You should repay your creditors fairly

Any spare money that you can put towards your non-priority debts should be shared out between your creditors, with larger amounts usually being put towards larger debts.

As always, it's a good idea to talk to a debt advisor first if you are struggling with multiple debts.

Remember, everyone's priorities will vary

This information should be considered a general guide and should not replace professional advice. Everybody's individual financial situations and obligations will vary widely, so you should prioritise your debts according to your unique situation.

What next?

Once you've sorted your debts into different categories and started paying them off in order of priority, there are more steps you can take to increase your income and speed up your repayments, namely:

Resolve a debt with Ophelos

If we have sent you a message about an outstanding balance, you can log on to our online portal with your reference code.

Our repayment plans are customisable to fit your personal situation, and we provide useful, judgement-free help every step of the way.

It's not always easy managing your finances, and it's perfectly normal to have some slip ups.

If you are behind on several payments, you may be feeling overwhelmed. Having several debts with different creditors can make it tricky to know where to start.

Here we explain how to prioritise your debts and get you back in control of your finances.

Why is it important to pay off debts in the right order?

It's really important that you know which to pay first, since some debts will have more serious consequences than others.

Not paying some debts may leave a dent in your bank account, some will prevent you from using a service while others might lead to court action. It's important to pay off debts in the right order so that you cause the least damage to your financial health and wellbeing.

Prioritising your debts can also help you to save money and clear debts faster.

1. Categorise your debts

The first thing you need to do is split your debts up into:

2. Handle debt emergencies

These are your top priority debts because they will have the most serious consequences. If you are facing a sudden emergency such as:

You should get seek free, independent debt advice urgently. Some charities which offer debt advice include:

A debt advisor will be able to explain your options to you, help you with what to do next and talk to the court, bailiff or creditor on your behalf.

You should always turn up to a court hearing if you have one, since it will give you the chance to come to an agreement. You will be able to explain your situation and put your case forward, which might help them reach a decision that works for you.

You can find more information on what to do if you are facing debt emergency here.

3. Pay off priority debts

Priority debts are debts which will have serious consequences if you don't pay them.

They aren't necessarily the largest debts or ones with the highest interest rates.

According to Citizens Advice, priority debts include:

You may find that there are other debts which could lead to serious problems for you personally. For example, if you need your car for work, then missing car payments could lead to a repossession of your car and have a knock-on effect on your job.

The consequences of not paying off priority debts could be:

We encourage you to access free debt advice if you are struggling to deal with priority debt, or if you have multiple priority debts and are unsure which to deal with first.

4. Pay off non-priority debts

Once you have got your priority debts under control, you should look at your other debts. Non-priority debts cause less serious problems if you miss them, though that's not to say that you can ignore them.

Many creditors will be able to give you breathing space on your non-priority debts while you deal with your priority debts. Find out how to ask your creditors to stop chasing you here.

Non-priority debts may include:

If you don't pay these, your creditors can take you to court in order to get you to pay. You can check what to do if you are being taken to court for a debt here.

You should repay your creditors fairly

Any spare money that you can put towards your non-priority debts should be shared out between your creditors, with larger amounts usually being put towards larger debts.

As always, it's a good idea to talk to a debt advisor first if you are struggling with multiple debts.

Remember, everyone's priorities will vary

This information should be considered a general guide and should not replace professional advice. Everybody's individual financial situations and obligations will vary widely, so you should prioritise your debts according to your unique situation.

What next?

Once you've sorted your debts into different categories and started paying them off in order of priority, there are more steps you can take to increase your income and speed up your repayments, namely:

Resolve a debt with Ophelos

If we have sent you a message about an outstanding balance, you can log on to our online portal with your reference code.

Our repayment plans are customisable to fit your personal situation, and we provide useful, judgement-free help every step of the way.

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