⏳12 minute read
Sometimes the creditors shouting the loudest are not always the ones you should pay first. Generally, priority debts are ones that have bad consequences for you when they are not paid but they might need prioritising for other reasons too, take a look below for more information.
What can go wrong with Priority Debts?
Generally, priority debts are ones that have bad consequences for you when they are not paid but they might need prioritising for other reasons too. Here are some examples of bad cosequences:
- Loss of home
- Loss of essential services
- Loss of an essential asset, such as a car
For more information, please visit our 'Enforcement of Debts' debt advice topic.
Make sure that you understand the difference between a priority debt and a non-priority debt. Take a look at the types of debts below & see which ones match your situation. You need to start prioritising these debts as soon as possible.
Priority Debt Examples
Maintain rent, mortgage and secured loan payments. Keeping the roof over your head is essential. If you have arrears with these creditors, negotiate repayments to clear them.
Essential Utility Services
Paying your utility bills for heating, lighting, water and phone, these are essential living costs. If you fall into arrears, stick to a a repayment plan to clear them.
Council tax is a bill that has to be paid by law so it's best to prioritise it in your budget. If you have arrears, these must usually be repaid over a short term, such as 12 months.
Magistrate Court Fines
Magistrate court fines i.e. parking or speeding fines must be repaid by law. You can ask the court fines Officer for repayment terms if not already in place. Keep repayments up to date.
Hire Purchase and Log Book Loans
Hire purchase or log book loans for vehicles essential for travel must be kept up to date. You can often negotiate terms or hand the vehicle back, seek free debt advice first.
Child Maintenance Support
Child maintenance under a court order or Child Support Agency, must be paid. Arrears payments can be agreed with a re-calculation if circumstances have changed.
Other Reasons to Prioritise Debts
There are of course other more personal and individual reasons to prioritise certain debts. You might need to prioritise a debt to a member of family because you live with them. Most people with bank overdrafts tend to prioritise them without thinking because their income goes in direct and gets swallowed up automatically to repay the debt. Don't forget that you can stop this by opening a safe and basic bank account.
If you have borrowed money from an illegal lender and are prioritising payments through fear, please seek urgent, confidential advice and see our 'Creditor Harassment' info on Loan Sharks'.
Request a Hold
If you have any priority debts that you are struggling with, the best advice is to let your priority creditors know that you are struggling and ask them for time to seek specialist debt advice. If you can pay anything towards your priority debts, it is good to do so as it shows good will on your part, if you cannot afford anything, you should seek urgent debt advice.
Money Advice Hub has developed a hold letter generator to make it easy for you to send a letter.
Template Hold Letter
You can use our free hold letter generator to personalise a hold request in a PDF format, this is then automatically emailed to you. The completed letter can then be printed & posted or emailed to your creditor(s), don't forget to save a copy. Please note that some creditors will accept electronic signatures by email & some may ask for your formal signature. The data you add to the form is not stored or used by Money Advice Hub or any 3rd party.
Sample Hold Letter
☎ 0333 305 7648* - Calls are at local rates* 📩 firstname.lastname@example.org