Priority Debts

If you are in debt and find that you are struggling to make payments, then it is important that you prioritise your debt. A good way is to look at your debts and see which ones are priority debts and which ones are non-priority debts.

Remember that the highest debt isn’t necessarily the one which needs to be tackled first, as priority debts mean that serious action can be taken against you if you do not pay.

What are Priority Debts?

Priority debts means that a service could be cut off if they are not paid on time, as the law gives different creditors different powers when it comes to recovering the outstanding debt.

For example, your mortgage is a priority debt and if you fail to keep up to date with mortgage payments your lender can force repossession of your home. It is important that you pay off the priority debts first, before you tackle your unsecured debt.

Examples of Priority Debts

Below gives a list of debts which are usually regarded as priority debts, along with the reason for its priority:

• Mortgage/Secured Loan/Rent Payment: Failure to make payment to a secured loan, mortgage or rent could lead to your lender repossessing your home or your landlord evicting you.
• Council Tax: Your council tax should be seen as a priority debt as the council can send bailiffs to your home, attach the debt to your income or apply for committal to prison.
• Gas or Electricity: The supplier can cut off your supply if you fail to pay these bills.
• TV Licence: If you do not pay your TV licence then you could pay a fine of up to £1,000 or face imprisonment.
• Hire Purchase/Conditional Sale: If you do not keep to the repayment terms, then these items could be repossessed.
• Income Tax/VAT/National Insurance Arrears: Evading payment means that bailiffs could be sent to your home or you could face imprisonment.
• Magistrates Court Fines: Failure to pay the court fines could lead to bailiff being sent to your home or imprisonment. The debt can also be deducted from your wage or benefits.
• Maintenance Arrears: If you are in arrears with your maintenance payments you could face prison, bailiffs could be sent to your home or the debt can be added onto your wage or benefits.

Other Debts which could be treated as a Priority Debt

Although not specifically classed as priority debt, there are other debts that you should consider as important:

• Water Arrears: Although water companies can no longer disconnect your supply, it is essential that you still make payment.
• Insurance Policies: Car insurance is essential by law and you should always consider insuring your home, as you could risk losing everything through fire or break-in. Payment Protection Insurance (PPI) could protect you from your lenders and help you to pay your mortgage if you are made redundant or cannot work because of illness etc.

Make Priority Debts Easier to Pay

If you find that you are struggling to manage your outgoings and cannot afford to make payments to both your priority debts and your non-priority debts, it is important that you seek help as soon as possible.

One Advice are a leading debt solutions provider and we can offer you ethical advice about your debts. You might be suitable for a debt management plan, where you can reduce your monthly payments to your non-priority debts which should leave you more disposable income to pay for your priority debts.

Perhaps you will qualify for an IVA, this is the only debt solution (besides bankruptcy) which can write off unaffordable debt. You make one low monthly payment for a typical 60 month period and, on completion of the IVA, you will be free from your unsecured debt.