Low Priority Debt

In our last article, we discussed which debt you should pay first and foremost. Now, let’s talk about the debt that should be the lower priority when you are striving to be debt-free or financially struggling to make ends meet.

Which Debt is Low Priority?

The following debt is considered lower priority when you are in debt up to your eyeballs.

Credit Cards and Medical Bills

Debt considered low priority is credit borrowed without collateral. This includes credit card debts and medical (doctor/hospital) bills. These types of debt don’t require collateral such as a house or car to acquire these loans and are considered unsecured debt. (Read more about unsecured debt here.)

Tip! Creditors have little recourse in the short term if you don’t pay your bill. Consider credit counselingdebt consolidation, or even debt settlementFind a vetted debt solution provider here.

Loans with only Household Items as Collateral

This type of debt is also a low priority. A creditor may ask you to use some of your household items as insurance on a loan. However, you should consider this loan the same as unsecured debt. The odds of a creditor taking your household items in exchange for monetary compensation are rare. Most household items have little resell value, and creditors would need to obtain a court order to seize them. Their time is not worth the expense.

Tip! Don’t feel threatened by a debt collector even if they inform you that they will sue in court. Your collateral may even be exempt from seizure. Discuss your options with a debt relief provider. Look for a debt relief provider here.


What about Student Loans?

Student loans are in a league of their own. They are not tied to collateral but cannot be discharged if you file for bankruptcy. Aside from student loan forgiveness, you must pay them. Student loans fall into two camps:

Government Student Loans

Government student loans should be paid before your low-priority debts. Since you acquired these loans with government funding, the law allows the government to pursue collection from you. These collection efforts include paycheck garnishment, tax refunds and liens, and reduction in Social Security benefits. You don’t want to go there. You work hard for your money.

Tip! You may qualify for income-based student loan repayments, deferment, refinancing, and loan consolidation. You may be able to get the debt canceled in a few situations. Contact your loan provider for more information.

Private Student Loans

Private student loans are like other types of unsecured debt and should be paid after your high priority debt and your government student loans but before your low priority debt.

Tip: Refinance your student loan debt to reduce your monthly payment and interest owed. Check out these educational loan providers for assistance.


When you realize you can’t pay all your debts and expenses, you need to decide which ones to pay first. If you are not sure where you stand on debt, try this free debt tool to help you understand your financial situation. Everyone’s finances are unique to them. There is no cookie-cutter resolution on how to achieve financial freedom. If you find yourself stuck on what to do, use these articles to guide you and then seek advice from a debt management professional.

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