Today, it is not uncommon for an individual to be paying off more than one personal loan. Utility bills and other common daily service related expenses can also be considered as some kind of a debt since these are paid off usually at the end of each month or on its cut-off date. Since all of these can be considered as loans, it is therefore necessary for an individual to manage them effectively and efficiently to avoid problems that may arise in case of a default in paying off these debts.
Prioritizing Your Debts
Prioritizing your current loans is the best way to manage and control your debts effectively and efficiently. If you reach a situation where you are starting to struggle in paying off your loans on time, the best thing to do is to try and divide your payables into three categories namely priority, non-priority and emergency debts. Priority debts are loans that possibly will incur very serious negative results if you are not able to settle. These debts do not necessarily involve large amount but they may result in serious problems such as a court suit. Priority debt normally include non-payment of utility bills, mortgages, secured loans child and alimony support and other debts that may take you to court if not settled immediately. Non-priority debts on the other hand may include bank overdrafts, personal loan, money borrowed from friends and families and credit card account balances. These types of debts may not incur serious problems since they can be dealt with by simply communicating with the lenders to give you more time to come up with the payment. In loans like these, the lenders are usually flexible in allowing the borrower to come up with the payment at a much later date. Emergency debts are the most serious type because if the loan is not paid at the soonest possible time you may end up facing a lawsuit or any court action; a visit from the bailiff foreclosing any of your properties; disconnection of services like light, water and gas and eviction for non-payment of mortgage or rent amortization.