Couple worried about debt

When your lenders are constantly phoning you, and you have received several ‘final reminder’ letters, you might be losing sleep about which debt you should pay off first. All debts need to be paid eventually, unless you have an agreement with your creditor or they cannot be enforced, although some are more urgent than others.

Debts are classed as ‘priority’ and ‘non priority’ depending on what would happen if you defaulted.

What counts as a priority debt?

This type of debt can severely affect your quality of life, and could even result in a prison sentence. The main examples are:
  • Mortgage or rent: You could lose your home if you have mortgage or rent arrears
  • Council tax: Non-payment of council tax can be enforced through the courts and you could be sent to prison. Get in touch with your local authority if you’re struggling to pay, as you may be eligible for a reduction.
  • Gas and electricity: You may lose your basic household supplies if you don’t pay the bills
  • Court orders: Child maintenance, fines, TV licences, where non-payment can result in further legal action and fines.

What is a non-priority debt?

Non-priority debts include credit and store cards, personal and payday loans and water bills and, while the consequences of non-payment might not be deemed as serious, you could still be faced with debt collectors, court action and bailiffs.

Whether you have priority or non-priority debts, or a mix of the two, it’s important to take action as soon as possible. Contact your local council to find out whether you can pay back council tax arrears in smaller instalments, and speak to your mortgage provider or landlord if you have fallen behind. The sooner you can agree manageable repayments, the more likely you are to get back on a secure financial footing.

When tackling non-priority debts, start with the ones that have the highest interest – such as payday loans. Remember too that all debts can spiral quickly, so it makes sense to get on track with a realistic repayment plan. This is particularly helpful if you are dealing with multiple providers, and are not sure which debt should be the priority.

To find out how we can help, visit out website or call 0808 250 9543.