There are lots of different debts, so it’s essential to understand which are the most important ones, and what the consequences could be from non-payment of them.
All debts can be classed as either priority or non-priority.
Priority Debts
| Mortgage | Rent |
| Secured loans | Utilities (gas, water & electricity) |
| Child maintenance | Magistrates’ court fines |
| County Court Judgements (CCJs) | Tax |
| Council tax | VAT |
| National Insurance | Telephone |
| TV license | Insurance policies |
| Hire purchase (like cars and washing-machines) | |
| Working Tax Credit / Child Tax Credit / Benefit overpayments | |
These debts have the most serious consequences for non-payment. In the worst case, this could mean you:
- have your possessions taken away by bailiffs
- lose your home
- are evicted
- are sent to prison
Most of the above can be avoided as long as you respond to any correspondence and talk to your creditors. You usually should be given the opportunity to take action and prevent such drastic consequences.
If you think you might need professional debt advice it’s best to act sooner rather than later. To talk to one of our debt experts now call free on 0800 043 2332.
Non-priority Debts
| Credit cards & store cards | Catalogue |
| Overdrafts | Credit agreements/Unsecured loans |
| Conditional sales agreements | Hire Purchase (non-essential goods) |
Don’t be confused to thinking that non-priority debts are not important. You are still legally obliged to pay them.
The consequences of not paying these debts are less serious though. They can’t, for example, repossess your home or send the bailiffs round without court permission. If they feel it’s necessary, they may seek the court’s help to recover what you owe them. This will affect your credit rating.
As with priority debts, as long as you communicate with creditors and act in good time, you should be given the opportunity to prevent any such consequences from happening.
A debt management plan or an IVA can help keep all debts up to date, as priority debts will be accounted for before we calculate your affordable monthly payment.
For impartial debt help and debt advice, or to go through your situation with a trained debt specialist call us on 0800 043 2332.
Help Budgeting
Budgeting is all about understanding how much money is coming in and going out of your household, and controlling your finances to ensure you have enough money to pay for your commitments each month.
We do this automatically when you contact us about your financial situation, as we use these figures to calculate your disposable income – how much you can realistically afford to repay on your debts.
You should always try to have more income (money coming in) than expenditure (money going out) as, otherwise, you will be eating into any savings, or worse still, using credit and getting even further into debt.
Complete the form on the right and one of our experts will provide FREE debt advice. To talk to an adviser, for immediate debt help, call FREE on 0800 043 2332.