Priority debts are debts that are more important than other outgoings. They are classed as a priority as the law allows extreme actions to be taken if a borrower fails to make a repayment. For example, the creditor may:
- Repossess or evict a debtor from their home
- Hire bailiffs to remove a person’s belongings from their property
- Cut energy services
- Summon a lender to court – which could result in imprisonment
Therefore, it is essential to pay priority bills before repaying other outstanding amounts. In order to help you take control of your finances, we’ve came up with a step-by-step guide to help borrowers stay out of the red.
Priority debts usually include:
- Council tax
- Energy bills
- Tax debt
- Tax credit overpayments
- Child maintenance
- Hire purchase or conditional sale
- Magistrates’ court fines
- Benefit overpayments
- Parking penalty charges
- Social fund loans
- TV licence
Contact the Creditor
When struggling to make debt repayments, a borrower should contact a creditor to explain their financial situation. By communicating with the creditor about a financial situation, the debtor could arrange a new payment plan that suits their budget, which will provide them with a little breathing room to pay other debts, whilst ensuring their finances don’t spiral out of control.
Creates a Budget Sheet
A personal budget sheet will help borrowers identify if they have more money going out instead of in. The sheet will also help a person prioritise the most important debts to the least. The National Debtline offer a superb money sheet that can debtors arrange their finances.
It is important borrowers pay as much money as possible towards priority debts, without missing ongoing payments. Should a person be in arrears, they should aim to make as many affordable payments to repay the outstanding amount, which will limit the action taken against them by the creditor.
It is bound to be a little daunting when a borrower receives an action letter from a creditor. However, before entering panic mode, bear in mind that it’s not too late to come to some sort of agreement with the lender. Contact the creditor to see if they are willing to make an alternative repayment plan.
Boost Your Income
Look into every financial avenue available, as every year people often miss out on hundreds of pounds that they’re entitled to receive. Look into benefits, tax benefits and universal credit entitlement, as well as other ways to increase your income, such as asking an employer for a pay rise.
Make a Complaint
If you believe you have been treated unfairly by a creditor, you shouldn’t be afraid to make a complaint to an ombudsman service. You have the right to complain if you believe the creditor has broken the terms of the conditions and, as a result, the law.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.