How to Make Good Choices - Which Bills to Pay
	General Rule. You must understand the legal effect of the nonpayment of specific bills in order to correctly prioritize which bills you should pay first, when you do not have the money to pay all of your bills. Do not give into harassment or the threat of a lawsuit to re-prioritize your payments. Be careful of payments to insiders.

One of the most important ways to get back on track is to learn which bills to pay when you do not have enough money to pay everyone.

You must understand the legal effect of delaying payment on your bills, in order to determine which ones to pay first and which to pay last or not at all.

Because most unsecured creditors, such as credit card companies cannot do anything to you for a while except harass you, don’t pay them as high priority bills. And you can take steps to stop that harassment. Even though they can eventually sue you and pursue collection on a judgment, that does take some time.

Usually you should pay your bills in the following order and priority:

1. Family necessities first. Such as food, utilities, health insurance, unavoidable medical expenses, but not old medical bills usually.

2. Home mortgage(s) and most other housing-related bills, such as rent, insurance, utilities. etc.. As long as these loans are valid liens on your home, you should probably pay them first. Unless you have made plans to not keep the home. If you are renting, them you need to keep that rent paid.

3. Car loans and other secured property loans, as long as you plan to keep the property. But, for example, if you plan to turn the car over to the lender, then you should not make any more payments on it.

4. Child Support bills, maintenance (alimony), and other court-ordered Domestic Support Obligations.

5. Income tax bills. Keep your tax obligations current, if possible.

6. Student loans are medium priority. Pay them before you pay unsecured creditors such as credit cards.

7. Bills and loans without collateral where there is no court judgment are low priority. Such as credit card bills, old attorney and doctor bills. They can eventually sue you and collect on a judgment, but this takes time and you can often settle with some of them. And, usually you can eliminate (discharge) most or all of these bills in bankruptcy.

Find out if you have any legal defenses to the payment of your bills.

Do not move up the payment of any bill in priority just because the bill collector harasses you or threatens a lawsuit. Debt collection lawsuits do take time. In contrast, if you are not paying secured debts, you may lose your property fairly quickly.

Co-signed debts should be treated the same as if they were your debt, without regard to the existence of a co-debtor. You are liable for full payment, whether or not there is a co-debtor.

And as noted in another section on exempt assets, generally do not spend retirement money which is exempt to pay your bills.

And if you might file bankruptcy, any payments made to unsecured creditors made prior to the filing can be recovered by the trustee. Particularly payments made to family members and other “insiders.” Therefore, be careful about making payments to most unsecured creditors.

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