Priority debts are your most important debts - ones which cover your essential costs of living. Your priority debts include:
- Mortgage / Rent
- Secured loans
- County Court Judgments (CCJs)
- Magistrates' Court fines
- Gas, water, electricity & telephone
- Child maintenance
- Council tax
- National Insurance
- TV licence
- Essential Hire Purchase goods (e.g. washing-machines, cars)
- Certain overpayments for benefits & Working / Child Tax Credit
What if I don't pay priority debts?
- face losing your home / eviction
- have your gas/electricity/water supply cut off
- have your possessions taken by bailiffs
- face a jail sentence (but only in extreme circumstances)
What should I do if I'm struggling with priority debts?
With most priority debts, one or more of the following may be an option:
Communicate - tell your creditors about your financial situation, and what you're doing about it. The more actively you're trying to improve your financial situation, the more likely they are to understand and want to help you.
Request - ask your creditors if they'll consider reducing your payments or freezing any interest or charges for a while. If they can see that they are unlikely to receive the full amount as fast as you'd originally agreed, they may make this compromise to make it easier for you to pay back as much as you can, as fast as you can.
Check - if you qualify for any benefits - such as Housing Benefit, Council Tax Benefit or tax credits. Many benefits are available whether you're working or not, and you could qualify for more than one.
Repay - on the other hand, if your financial situation has improved since you missed payments, you can ask your creditors about the best way of repaying the arrears (on top of your ongoing payments).
Prioritise - if you are struggling because of non-priority debts, focus on your priority debts first and foremost. Your priority debts are the ones that support your basic standard of living. It would be much worse to have your home repossessed than having your mobile phone connection cut off.
Consult - seek free advice from debt solutions experts to find out options open to you. Collection agencies are companies that specialise in buying and collecting debts. They can either buy the debt from the original creditor or are paid a percentage of the amount they collect. Once a debt passes to a collection agency you pay them direct and in many cases, the agency can stop interest and charges. However there is no guarantee that they will agree to suspend interest and charges. You can still arrange an affordable monthly payment at this stage and you must stick to any offer you make.
Collection agencies are not bailiffs and they do not have any more legal powers than the original creditor. They can contact you by letter or telephone and in rare cases may call at your home. Collection agencies still have to follow Office of Fair Trading (OFT) guidelines on fair debt collection.
There are reports of some companies sending out letters claiming that money is owed and sometimes obtaining money from terrified recipients of such letters uncertain as to what the debt actually refers to. It is important to establish what the debt does actually refer to, and from where the debt collection company has obtained the debt. However many companies are perfectly reasonable and very willing to set up a repayment plan for a genuine debt that is based on affordable payments.
Before you pay a bailiff, or let them in, ask to see proof of their identity - like a copy of their bailiff certificate. Also ask them for either a copy of the court order saying you owe the money or a copy of their 'authorization' (permission) to take your things.
You may want to pay the bailiff some or all the money you owe. You can pay them on the doorstep - you don't have to invite them into your home. Make sure you get a receipt, to prove you've paid. If you can't pay anything right away, speak to the bailiff about repayments, or tell the bailiff you'll pay the money back directly to the organization you owe it to and write to this organization, and offer to pay what you can afford. If you don't offer to pay, you could be taken back to court.