Let’s continue our discussion of prioritizing debt by considering what this order of priority might typically be.

• Child support. An individual owes it to his children to keep these payments current and up to date. If an additional incentive is necessary then it should be noted that failure to pay these debts can lead to significant legal consequences..
• Loans with collateral. If these loans are not met, then the lender has the legal right to claim possession of a designated asset. A typical example of this would be a car loan.
• Credit cards. The credit cards with the highest interest rates should be given first consideration. These cards have the greatest percentage increases in monthly balances.
• Health Insurance. Failure to pay this debt will eventually lead to dropped insurance coverage. If an individual were to incur a costly medical expense without adequate coverage then this could result in a great increase in overall personal debt.

When debts begin to accumulate it is important to take immediate actions to remedy the situation. However, until a person’s financial health is restored it may not be possible to pay all of the bills. In this situation is becomes necessary to prioritize the outstanding debts. This will help ensure that any negative consequences are kept to a minimum.