Not everyone is in a position to pay off all of their debts when they enter a financial rough patch. The person who has lost income may not be in a place to repay all debts on schedule as planned. It’s not that the person intentionally took on the debt with the intent of not paying it off; it’s just that the decision was made when the personal finance situation was entirely different. The stressful economy has left many households cash-strapped. In the new economy, people have had to revisit their debts with prioritization in mind.
Unsecured and secured debts should be prioritized differently. If the person is unable to pay off all of their debts with their existing budget, one has to treat the unsecured debts differently from the other ones. The unsecured debts can be temporarily put off because there is no collateral attached to the debt. Hospital bills and credit card debt can be put off temporarily while one focuses exclusively on catching up on car payments or the mortgage. It’s always best to look at debt in terms of what assets are at risk if no payments are made. The problem with not paying on any debt is the impact it can have on one’s credit score. Both unsecured and secured debts can damage a person’s credit if they go unpaid.
Rather than ignoring some debts while focusing on others, there is another option. Getting debt consolidation help gets a person back on track. The person can receive counseling and advice from debt counselors who can structure the debts in a way where no payments are skipped. All debts can be bundled together in a debt consolidation help program and the person no longer has to worry about the consequences of not paying the debt. Clients appreciate not having to communicate with each creditor to create a series of different payment arrangements while struggling on a monthly basis to meet commitments made with a limited budget.
If a person has to choose between unsecured and secured debts, the unsecured debts should always come first. The credit score will be affected in either case if payments lapse. If working with a debt consolidation help group, the counselor will handle all of the arrangements and oversee the prioritization of the debts.