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Why Prioritize your Debt?

It is not uncommon that because of continuous borrowing, you may end up having more debts than you can manage. When this happen, it is not surprising that you may get overwhelmed and perhaps be confused on how you would go about paying off the debts. There is always a solution to every problem and these include those from getting more than one personal loan. The first step in resolving this kind of financial dilemma is to initially prioritize all of your debt in the manner of importance.

 

Prioritize Your Debts

 

Create a spreadsheet that will classify you debt into Priority or Emergency Debts and Non-Priority Debts. Priority or emergency debts loans are the ones that should be immediately acted upon or resolved or you will either be taken to court, arrested for non-payment of debts, disconnection of basic utilities (electricity, water, gas, etc) due to non-payment and eviction for not paying your monthly rent or mortgage amortization. This type of debts should be immediately settled or at least compromised. No matter how bad your debt situation is there is always room for dialogue between you and the person you owe money to. Priority debts include court fines (such as accumulated parking tickets or any other traffic violations); non-payment of income tax; child support and maintenance if divorced; utility bills; mortgage, rent, or security loans where your property is the collateral. Non-Priority debts are those that do not incur serious damage to either your credit reputation or income. Non-priority debts usually include overdraft; personal loan; payday loan; loan from families and friends; and Credit card loans. However, you also cannot leave this debts hanging in the air for a long time because the lenders can and will file the proper lawsuit against you if you continue not to repay them. In case of money borrowed from relative and friends, you just might end up losing all of them if you just keep on promising them of payment but never do. When paying non-priority loans make sure that you pay-off the most expensive debt first. When this is done paying off the rest would be easy to manage.