When you’re struggling under the weight of debt problems, it’s all too easy to lose perspective. But panicking about your situation isn’t going to help, no matter how understandable that may be.

To stand a chance of overcoming your problems, you need to take a calm approach and decide which of your debts are the most urgent to deal with. Here’s how.

Government Debt

If you owe money to the government, whether it’s through outstanding taxes or unpaid fines, you need to deal with these as a priority. This doesn’t necessarily mean paying them in full, but you need to get in touch and make an arrangement of some kind.

Ignoring these debts will land you in a serious amount of trouble, including legal action, and the authorities will never turn a blind eye to what you owe.

Debts Which Impact Earnings

Next, you need to take care of any debts which affect your ability to earn money. For example, if losing your car means you’ll lose your job, then making your auto loan payments should be high on your list. Without income, you have no chance of keeping on top of any of your other debts.

Secured Debts

If you have debts secured on your home, you need to take a long look at this situation. Pay what you can to prevent repossession proceedings, but also contact your lenders and try and restructure your debt to make things easier.

In the long term, consider taking the decision to sell your home and move into cheaper rental accommodation. It’s better to do this in a controlled way rather than hanging on and losing everything.

Life Essentials

Next, try and pay something toward your essential debts such as energy bills. These may seem urgent, but in reality, so long as you don’t get too far behind you won’t have your supplies cut off.

Energy companies are usually happy to come to an arrangement to clear old debts over time, so long as you make token repayments in the meantime. After all, they’d rather you pay something than nothing.

Unsecured Debts

At the bottom of the heap are unsecured debts, particularly credit cards. Card issuers will make a lot of noise if you owe them money and will send increasingly scary letters threatening all sorts of dire consequences.

But the truth is, if you default on an unsecured debt, the only thing at risk is your credit rating. You can’t be sent to prison, and your possessions or home can’t be seized to clear what you owe.

It’s important to keep your unsecured creditors in the loop and pay what you can, but don’t let them panic you into neglecting your other, more urgent debts.

It’s a terrifying experience to be facing debts you can’t handle. But losing perspective is one of the worst things you can do if you want to come out the other side of your problems. Prioritizing your debts and keeping all your creditors informed gives you the breathing space to find expert help and start getting back on your feet.

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