Priority debts are the most important due to the severity of the consequences of not paying them and the legal options open to priority creditors. They should be dealt with before any other debts.
Non-payment of priority debts can result in:
- Eviction from your home
- Repossession of your home or any other property you own
- Disconnection from utilities such as gas and electricity
- Visits from enforcement agents (bailiffs) to remove goods from your home or business
- Bankruptcy proceedings
- Arrest and imprisonment.
Priority debts include:
- Rent arrears can result in eviction, leaving you and your family homeless.
- Mortgage arrears can lead to repossession of your property. If the property is also your home, you and your family will be homeless.
- Repayments on secured loans. If you don’t keep up repayments on loans secured on your home, even if they are not your first mortgage, your home can be repossessed.
- Utilities such as gas and electricity. Your supply can be disconnected if you fall into arrears.
- Council tax. If the arrears are not paid, the council can obtain a liability order that allows bailiffs to be sent to take goods from your home. In some cases, non-payment of council tax can lead to imprisonment.
- Court fines, such as Magistrate’s court fines or parking penalties. If you don’t pay these, the court can use bailiffs to take your goods and you could even be sent to prison.
- Maintenance payable to a former partner and/or children, including child support owed to the Child Support Agency (CSA). If you don’t pay, a court can use bailiffs to take your goods. If, after this, you still have arrears unpaid, you can be sent to prison
- Income tax or VAT. HMRC can use bailiffs or issue bankruptcy proceedings to recover income tax or VAT.
- TV licence. It’s a criminal offence to watch television without a licence and you could be fined.
- Hire purchase agreements (such as car finance), where the goods purchased can be repossessed, can be considered a priority if, for example, you need your car for work, are disabled or live in a rural area with little transport.
It is important to contact your priority creditors as soon as you find yourself in difficulty. Explain your situation and ask for more time to pay, ask them to agree to allow you 14 or 28 days to sort out your finances.
If the creditor refuses to negotiate or accept your repayment offer, try to contact someone in a higher position with more authority. Refusal to negotiate or accept reasonable offers can be the subject of a formal complaint.
Some debts can be repaid through deductions from benefits such as JSA or ESA. These include rent and council tax arrears, gas and electricity arrears, fines and maintenance payments. These deductions have to be made at the request of the creditor.
Do not ignore priority creditors.
Most County Court judgments (CCJs) are not priority debts, however, it is always advisable to apply for a variation of the terms of the court order to prevent enforcement action by the creditor. See variations.