What are priority and non-priority debts?
When you’re struggling to keep up with your bills and debt repayments, it may be tempting to pay the creditor that shouts loudest first. But it’s important to pay priority debts before non-priority debts. Find out the difference between the two and what to do if you’ve got money worries.
What's in this guide?What’s the difference between priority and non-priority debts?Which debts are priority debts?Which debts are non-priority debts?Being fair to your creditors
What’s the difference between priority and non-priority debts?
Priority debts are the ones that could have the most serious consequences if you don’t pay them. The possible consequences of not paying priority debts include:
- losing your home (repossession or eviction)
- being visited by enforcement agents (bailiffs)
- being forced onto energy prepayment meters
- having your gas or electricity supply cut off
- losing essential hire purchase belongings
The consequences of not paying non-priority debts are usually less serious. But creditors may still take action against you. Your debt could be passed to a debt collection agency and you could have a county court judgment made against you.
Which debts are priority debts?
Priority debts include:
- mortgage payments
- overpaid benefits
- loans that use your home as security
- gas and electricity debts
- council tax
- court fines
- hire purchase agreements for essential items (e.g. a car if there was no other way for you to get around, or an oven)
- child support and maintenance payments
- TV licence
Which debts are non-priority debts?
Non-priority debts include
- credit card debts
- hire purchase agreements that aren’t for essential items (e.g. a TV)
- loans that don’t use your home as security
- water bills
- money borrowed from friends and family
Being fair to your creditors
If you have numerous debts, any spare money you have must be shared out fairly between your creditors. Not doing this might stop you entering a formal debt solution (e.g. a debt relief order or bankruptcy) further down the line. With this in mind, it’s a good idea to talk to a debt adviser before agreeing payment plans with individual creditors.
income & budgeting
06 Dec 2023
How opening a Help to Save account can help boost your savings if you're on a low income, the eligibility criteria and how to apply.
23 Nov 2023
As a carer, you may be entitled to certain benefits. In this guide, we outline those benefits and explain if you’re eligible and how to apply.
31 Oct 2023
Find out when an IVA might be a suitable option for you, the benefits of an IVA and the things you need to bear in mind, as well as alternatives to an IVA.
31 Oct 2023
Find out the steps of how to go bankrupt, including filing for bankruptcy and what you’ll need to do once you’re declared bankrupt.