Which one should I pay first?

It’s not easy to prioritise when lots of people are shouting for their money back, and the temptation is often to pay the person who shouts loudest first. That’s rarely a great idea, since the person who shouts loudest often only does that because there is nothing else for them to do.

Let’s say you’re in debt to your credit card company, and you can’t afford your normal monthly repayment. What’s the worst they can do to you? They can put a black mark against your credit rating, and they can threaten you with court action. But if you don’t have any money what’s the point of taking you to court?

What happens if you get into arrears with your electricity bill though? Your supply can be cut off. Likewise if you don’t pay your mortgage for long enough you can have your house repossessed. Both actions are a lot worse than a poor credit rating or threats of court action. But the electricity company or your mortgage provider might not make as much noise about the fact that you are in arrears as your credit card company will.

So don’t always pay the person who shouts loudest first. Have a look at the consequences of not paying your outstanding creditors before deciding in which order you should pay them back.

And please remember that this is not a get out of jail free card. I’m not suggesting for a minute that you shouldn’t pay your debts. Just that if you can’t do it all at once then any repayment plan needs to be sensible and take account of what would happen if you default. As always it makes sense to contact your creditors as soon as you think there may be a problem with payment. The longer you put these things off the harder it can be for your creditors to come up with a sensible solution.

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One Thought to “Which one should I pay first?”

  1. Allen Simpson

    Please mention Citizens Advice Bureaux who have experts available to help people to manage their debt with a range of solutions based on individual circumstances. The advice is free and confidential.

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