Prioritizing Debts

Due to recent pay freezes, increased food and fuel costs and a rise in the VAT rate people have difficulty paying their monthly bills in time, in particular when it comes to their loan commitments.

According to the recent projections from the Bank of England, the base rate of interest for loans is likely to be increased up to three times before the end of the current year. This could lead to even more financial problems for borrowers, leaving some of them in a desperate situation where they fail to manage their loans.

People find themselves in this situation have been advised by Atlantic Financial Management to maintain the most important debts in the first place, otherwise they could have their homes repossessed.

Unfortunately, many borrowers do not seem to understand how to prioritize their debts and Atlantic Financial Management have recommended that borrowers make sure their secured loans are placed at the top of the list.

Of course, it is still necessary to maintain the repayments of unsecured loans and credit cards. However, these should be placed behind secured loans by order of importance.

Kevin Still, of Atlantic, commented that for many people, whose budgets had been already reduced, it would be tempting to fixate on reducing payments on unsecured debts because when unpaid, these debts would quickly increase.

Although it would not be reasonable to ignore these debts, when it becomes extremely hard to make the ends meet, maintaining mortgage repayments should definitely be the first priority. The risk of losing your home is too real when you fail to keep up with mortgage payments.
 


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