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.
All other debts are non-priority debts and must rank for payment down the pecking order. Unfortunately, we come under pressure from the creditors who scream the loudest for payment. These creditors, particularly credit card providers, often send us threatening letters or phone us frequently and aggressively or call to our homes. However, we cannot afford to lose our home and be put out on the street. We cannot afford to have our utilities cut off. We cannot live without food, drink and clothing.
Once you have made your priority payments any money that you have left over can go towards paying your other unsecured debts. This money is known as disposable income. If you have a big enough disposable income to pay your non-priority debts by paying the minimum monthly amounts then there is no problem. If you do not have enough disposable income the first thing to do is to divide it fairly between all your creditors and then reach an agreement with each of these creditors on the amount you can pay them back 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, an 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.