People have to live so in assessing which bills to pay first, one must consider the essentials of life – food and shelter. Making sure you pay your priority debts comes before all your other debt payments and is regardless of whether you are getting pressure from your creditors. Your priority debts are paying for somewhere to live, food and drink, clothing and heat & light, your main necessities. Priority debts may also include your mortgage. So then you must aim to pay these bills first – the mortgage / rent, utility bills including heat, light and water, and of course food, drink and clothing. Even in a situation where there is insufficient income or money to pay all of the bills, these essentials of life must command the most attention from us or day to day living will become impossible.
Other bills and debts that you have should be seen as non-priority debts and arent as important as paying your priority bills. Most people however will come under pressure from their creditors who will be looking for payment. They will usually send you threatening letters and phone you constantly, basically hunting you for debt payments. However no matter what you owe your creditors no one can afford to lose their home, nor can they afford to have their utilities cut off. Whether the creditors are pressurising you or not you cannot be expected to live without food, drink and clothing, so for these reasons the creditors bills are just not as important.
When you have made your priority debt / bill payments any money that is left over can go towards paying your other debts. This money is known as disposable income or DI. If you have a big DI then you should be able to pay off te rest of your debts no problem even if its just the minimum payment each month. If you can afford the minimum payment each month you will have to work out how much you can afford to pay each and arrange it with them that this is the amount you will pay to each of them each month.
If you are unsure how to do this or dont want to negotiate with the creditors then you can always seek professional advice from an Insolvency Practitioner. They will be able to determine if you are insolvent or not, and they can also assist you in compiling an Income & Expenditure Statement, and also explain all available options to you.
The debt options that could be available to you could include Bankruptcy, Administration Order, a DMP, an IVA, a Debt Relief Order, Debt Consolidation or some other financial solution. Once you know all your options you can make up your mind if you want to proceed further with any of the debt solutions. You do not have to commit to anything this point and can walk away & sort out your own finances.
