The National Consumer Law Center advises debtors to prioritize their debts and decide which bills they must pay first, usually household expenses (home, apartment, food and medicine), cell phone and other utilities, car and appliances such as refrigerator or washing machine.
These are some of the key steps they recommend:
- Always pay family necessities and housing-related bills;
- Pay the minimum required to keep essential utility services;
- Pay car loans if a car is essential for your work and family;[1]
- Pay child support debts and income taxes;
- Do not move a debt up in priority because the creditor threatens to sue you or continually calls your home; and
- Some debts may not be legally binding. See below under “It may not be legal for the debt to be collected.”
[1] In the case of a car title loan which you cannot pay off, you can either find someone willing to buy the car and use that money to pay off the loan, or just turn the car in to the lender, especially if the debt is more than the value of the vehicle.