If you’re in debt up to your eyeballs, or at least up to your waist, it can be hard to see which debts should be paid first. The creditor that screams the loudest may not be the best one to repay first.
Some debts should take precedence over others because they can have worse consequences. Here are bills you should pay off first:
A lien could be placed on your property, tax refund intercepted, and your car could be booted, among other things you don’t want.
To resolve this, the feds may put a tax lien on your property—which will be listed on your credit reports—and they could seize your property and garnish wages. Money in retirement accounts and other bank accounts you have may be claimed, and your home or vehicle may be sold to pay the debt.
The car may be sold at auction. You may also be required to pay the difference between what the car is sold for and how much is left on the loan.
If you don’t have a title loan but are financing your car with an auto loan, paying late or missing a payment or two could cause the vehicle to be repossessed. You’d have to make the payments, along with late fees, to get it back.
That can be enough time to pay the missed payments and late fees, or at least find another place to live. Your credit score will be extremely low, making it hard to rent or obtain another home loan.
