Money Matters: Debt awareness week special - how to prioritise debts
In this week's Money Matters column, Wrekin's Debt & Energy Manager Dan Bebbington discusses how to prioritise debts.
This week marks Debt Awareness Week, which aims to highlight the issue of problem debt and how to get advice on dealing with it.
During the cost of living crisis, we’ve received a significant increase in referrals for help.
In some cases, we’ve spoken to customers who may not have experienced financial difficulty in their lives before.
Our message to them and anyone facing money troubles is simple – don’t be afraid to ask for support.
Another important piece of advice we give people is to make sure they pay debts off in the right order.
It’s helpful to work out who you owe money to and split them into two categories - priority debt and non-priority debt.
Priority debt is money that is owed when paying bills for essential services such as rent, gas, electricity, water and council tax.
These should be dealt with first because they carry the most severe consequences if you don’t pay.
Non-priority debt is money that is owed because it was borrowed as a loan such as a pay-day loan, bank overdraft and purchases with a credit card or from catalogues.
Although important, these debts have less severe consequences for non-payment so should be dealt with after priority debt.
The following tips are also useful to remember when handling debt:
- Don’t ignore letters or phone calls
- Don’t be pressured into making offers of payment that you can’t afford
- Don’t wait for court action - the costs will be added to the amount that you owe
- Remember there is free debt advice available - you do not have to pay for it
- Plan your budget
We know debt can be a difficult subject to talk about, but doing so can feel like a weight lifted off your shoulders.
There are a number of organisations which offer free advice, including Citizens Advice, Step Change and the National Debt Line.
If you feel like you’re struggling to make ends meet, make sure to reach out for support this Debt Awareness Week.
24th March 2023