Sorting Priority and
Non-priority debts
It is important to divide your debts into priority
and non-priority debts. Many people get into difficulty because
they pay the wrong creditors first.
Priority debts are debts that could result in your losing your
home or an essential supply, if they are not paid.
Below is a list of debts that are usually regarded as priority.
Priority Item & Reason for Priority
- Rent or Mortgage and secured loans - Lender or landlord can repossess
the home
- Council Tax - Council can use bailiffs, attach benefit or wages
and apply for committal to prison
- Electricity and Gas - Supplier may obtain permission to disconnect
supply
- Magistrates' Court Fines -
Bailiffs can be sent to collect unpaid fines, refusal to pay
can result in imprisonment. Maintenance arrears/CSA Bailiffs
or deduction from earnings,
or committal to prison
- HP/conditional sale, rented and hired
goods - Goods may be repossessed
- Business Rent - Repossession of premises
- Business Rates - Bailiffs, committal to prison
- Income Tax/VAT - Bailiffs, committal to prison (for evading payment)
- TV Licence - Fine of up to £1000
Other items to consider:
Water charges - Water companies
may no longer disconnect supplies to enforce payment, but payment
of water bills must still be regarded
as an essential.
County court orders - If you have been ordered to pay a debt via
a county court order. However courts will take into account someone's
ability to pay a debt. If you cannot afford to pay, see the section
on county court judgments for how to deal with this.
Insurance (especially of your car and home) - Car insurance has
to be paid by law, but insuring your home can be overlooked as
an essential item; if you are uninsured, you could lose everything
through fire or theft.
Always remember to check if you have any insurance policies (payment
protection policies) that will help you to pay your mortgage or
other form of borrowing in the event of illness, disability, redundancy
etc.
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