Prioritizing Your Debt

Consumers dealing with crushing debt all eventually get to the point that they simply can't pay every creditor, and that's when prioritizing your debts becomes crucial. Read on to learn whom to pay when you don't have the money to pay everyone.

Secured Debts Come First

A debt consolidation company online will only accept unsecured debts, which means you will need to manage your secured debts on your own (varies by service). Your house payments, car payments, and any other loans linked to something you own are examples of secured debts. If you fail to keep up with the payments on secured loans, the lender has the ability to repossess whatever property you used for collateral. In other words, you could lose your home or your car if you don't make your monthly payments on these types of debts. Your online debt consolidation company will help you sort out your unsecured debts later, but in the meantime, you need to make your secured debts your priority.

Always Pay Living Expenses

Paying living expenses is even more important than making payments on your secured loans. You absolutely need food on the table and a roof over your head, so prioritize these obligations. Examples of must-pay living expenses are rent or your mortgage payment, utilities, your water bill, and essential grocery items. Your debt consolidation company online will ideally make it easier to pay both living expenses and your debt obligations, so this shouldn't be too much of a problem once you consolidate.

Expensive Cards Take Precedence

Last on your list of priorities should be unsecured debts, which are typically credit cards. If you haven't found a debt consolidation company online yet and are still dealing with multiple accounts, find the one with the highest interest rate. You should pay as much as you can on this card and forget about the rest if money is really tight. If you have any money left over, you might try to make at least the minimum payments on one or two of your other cards. You won't have to make these difficult decisions once you hire an online debt consolidation company because all of your accounts will be joined in an effort to improve interest rates.

Emergency Strategies

If you can't pay all of your creditors on time, you might be able to pay some of them on time and others later. When you plan to pay some of your lower-priority debts late, make sure you let the creditor know beforehand. Explain your situation and your intentions to send a payment as soon as possible. Just don't get too behind on your bills; debt consolidation companies online tend to prefer customers with relatively current accounts.