Creditors

• The debts you owe to creditors can be categorized as either secured or unsecured. Secured debts are protected for the lender by your promise to repay the debt and the extra security of collateral. Collateral can be any of your assets, but typically it is the property you purchased, such as your house or car. Mortgages and car loans are examples of secured debt. Secured creditors can repossess the collateral (such as your house or car) and sell it, if you breach the terms of your loan contract. Another type of debt, unsecured debt, is money that the lender loans to you based only on your promise to repay the debt according to certain terms and conditions. Examples of unsecured debt include credit cards and personal loans.
  
  

Prioritizing Debts

• Everyone has his own ideas about what bills should be paid first when money is tight, but many experts agree that paying your mortgage or rent should be at or near the top of the list. Examine your family's needs when prioritizing debts. If your financial situation allows you to pay all your bills for the month, but you cannot pay them all on time, you may want to give priority to bills that incur the largest fees when paid late. Bills that come with hefty late fees and penalties, the threat of repossession or foreclosure (such as your home) or substantial reconnection or reactivation charges should get paid on time. Keeping track of all your bills, the approximate monthly amounts, the due dates for each one and the fees (if any) that are incurred with late payments, is essential to prioritizing your debts.
  
  

Insufficient Funds

• When there is just not enough money to go around, deciding which bills can be delayed or even canceled can be a stressful task at best. Examining your family's requirements can help. Determine which bills pay for the things your family absolutely needs to survive and to continue generating income. Some factors may include: paying car loan payments if you depend on a vehicle to be able to work; paying utility bills, as going without utilities obviously greatly impacts quality of life; paying for phone and Internet service if they're commonly used for work-related tasks, and paying child support to avoid costly court and legal fees. Pay the bills most vital to your family's well-being first, and be prepared to stand your ground when creditors for low-priority debts start calling.
  
  

The Top Five

• Most experts seem to agree on five bills that usually have top priority, as losing the services they pay for presents the most risk to your family's health and security. The top five bills consumers should pay first include housing, food, utilities, medical care and transportation. Unsecured debts are low priority, since it is typically more costly for the creditor to sue for what you owe.