Whether you’re seeking out an organised debt management plan or you’re trying to resolve your debt problems alone, one of the most important things to do is to prioritise your debts.

If you have debts from multiple creditors, deciding which ones are the highest priority can be difficult.

Here are the highest priority debts you should look to clear as soon as possible.

Mortgage or Rent Arrears

The simple fact of the matter is that if you fail to pay your rent or mortgage, you could lose your home.

With mortgage arrears, you could even face legal action and the lender you take possession of your home.

With mortgage arrears, your landlord could evict you, leaving you without a home and still owing the money.

As soon as you find yourself in any difficulty meaning you cannot afford your mortgage or rent, you should contact your lender or landlord as soon as possible and explain the situation fully. Treat this as a high priority payment.

Tax, National Insurance and VAT

Failing to pay tax could lead to bankruptcy and potentially even criminal proceedings against you.

This is certainly a high priority debt.

Council Tax

Again, this is a debt that should be considered high priority, as failure to pay could result in legal action against you.

Hire Purchase Agreements on Essential Items

While hire purchase payments against non-essential items should be considered low priority, essential items that require a monthly payment should be high priority. Examples include a car that you use for getting to work. Any item where losing it will inhibit your ability to go to work or to live is an essential item.

Gas and Electricity

Gas and electricity companies have the right to cut the supply to your home if you fail to pay and as such this is again a high priority bill.

Of course you should pay your water bill as well – though water cannot be cut off and as such should be treated as a lower priority debt.