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SG MONEY LENDER SINGAPORE LATEST NEWS How to prioritise your debts

July 15, 2016

SG MONEY LENDER SINGAPORE LATEST NEWS How to prioritise your debts

If you have several debts, you might be feeling overwhelmed. Read more about how to prioritise and work out which debts to pay off first to help you save money and clear your debts faster.

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If you have several debts, you might be feeling overwhelmed. Read more about how to prioritise and work out which debts to pay off first to help you save money and clear your debts faster.

  • Why it’s important to pay off your debts in the right order
  • If you’re facing a debt emergency
  • What are priority debts?
  • Why you should pay off priority debts first
  • What are non-priority debts?
  • How to pay off non-priority debts faster
  • Get free advice about dealing with debts

Why it’s important to pay off debts in the right order

The consequences of not paying off some debts before others can be more serious. So if you’re struggling to make your repayments on time, you need to look at all your debts and split them into:

  • debt emergencies
  • priority debts
  • non-priority debts

If you’re facing a debt emergency

If you’re facing an emergency now or in the next few days, such as:

  • court action
  • bailiff action
  • eviction for mortgage or rent arrears
  • disconnection

Get free, independent debt advice urgently. A debt adviser will be able to talk to the court, bailiff or creditor on your behalf. They will also advise you on what to do next.

Always turn up to a court hearing. It gives you the chance to come to an agreement.

If you don’t go, a decision may be made without taking into account information about your situation.

If you are there you can tell the court what’s happening and it might help them to reach a decision that is better for you.

Visit fee or low cost legal voluntary centers if you require legal advices. Such organisations are usually located near in a community club near you.

If you’re due in court within 24 hours, ask if there is someone you can speak to before your case is heard.

Get free debt advice

What are priority debts?

Priority debts are those that carry the most serious consequences if you don’t pay them.

These don’t have to be the largest or debts with the most expensive interest rates, but if you don’t pay them it could lead to serious problems.

Priority debts include:

  • mortgage, rent and any loans secured against your home
  • Income Tax
  • Council Tax
  • gas and electricity bills
  • child maintenance
  • TV Licence
  • hire purchase agreements, if what you’re buying with them is essential
  • court fines

Why you should pay off priority debts first

The consequences of not paying off priority debts could be:

  • losing your home – because you’re not keeping up with mortgage or rent payments
  • receiving a court summons
  • being visited by bailiffs
  • being made bankrupt – because you haven’t paid your tax bills
  • having your heating or lighting cut off – because you haven’t paid your fuel bills

What are non-priority debts?

The consequences of not paying non-priority debts are less serious.

If you don’t pay non-priority debts, your creditor could eventually take you to court or instruct bailiffs to collect money from you.

Your non-priority debts include:

  • credit card, store card debts or payday loans
  • catalogue, home credit or in-store credit debts
  • overdrafts
  • bank or building society loans
  • personal loans
  • money borrowed from friends or family

Utilities  and telco bills

Utility bills are treated as non-priority debts but you should include them as essential household outgoings.

They are an ongoing service that you need to pay for.

If you don’t pay at least your current water and sewerage bills, the amount you owe will continue to go up.

How to pay off non-priority debts faster

You must pay at least the minimum payment on all debts to avoid falling behind.

If you can afford to pay more, share out the extra cash in the following way to save money on interest costs and become debt free quicker.

Target the most expensive debt first

  • Target the debt with the highest interest rate shown on your monthly statement or loan agreement first.
  • Check that you won’t be charged any penalty or default charges for overpaying.
  • Pay as much as you can afford without breaking the terms of other credit agreements you have.
  • Once you’ve cleared your most expensive debt, move on to overpaying on your next most expensive one.
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