You might think your top priority debt is that wretched high cost loan or the debt collector that keeps phoning you at work, or the money you borrowed from your sister who now needs it back. But the terms “priority” and “non-priority” debts have special meanings in debt advice and you need to know which of your debts is which, as it changes how you deal with them.
Citizens Advice research found that 28% of people would pay a debt such as credit card bills or personal loans ahead of household bills, like rent, mortgage or utility bills. This is dangerous and putting yourself at risk.
Non-priority debts
- credit cards, store cards and catalogues;
- the “spread the payment” credit from lenders such as Klarna;
- unsecured loans, from a bank or other lender;
- overdrafts;
- high cost debts;
- water bills; and
- loans from friends and family.
Failing to pay non-priority debts is usually less serious than not paying a priority debt. You can’t get sent to prison for paying non-priority debts! But they can still result in CCJs, bailiffs, charges over your house, bankruptcy etc so “non-priority” doesn’t mean “safe to ignore.”
Sometimes one of these debts is really important to you so you want to treat it as a priority:
- perhaps you have a loan from your employer and are worried your job might be affected if you can’t repay it;
- your mum may have taken a loan so that you could buy a car and she can’t afford the loan repayments if you don’t pay them;
If you have this sort of “very important but not a priority debt” problem, it’s a good idea to get debt advice to help you resolve it.
Priority debts and bills
- mortgage repayments and loans secured on your home;
- rent;
- car finance and HP for furniture;
- logbook loans;
- gas and electricity bills;
- child support and maintenance payments;
- council tax;
- income tax, VAT and other tax debts;
- TV licence payments;
- Magistrates Court fines (not penalty fines such as parking); and
- certain payments ordered by the courts.
These are priorities because bad things can happen if you don’t pay them. Getting behind with the mortgage or rent can lead to eviction. Your gas or electricity supply could be cut off, or you may have to accept an expensive pre-payment meter instead. HP items can be repossessed. If that parking ticket isn’t paid quickly it may escalate alarmingly.
You could go to prison if you don’t pay your council tax, TV license, taxes or magistrates court fines. Being sent to prison is rare. For council tax it tends to be reserved for the “won’t payers” rather than the “can’t payers”. But councils are among the fastest creditors to go to court and this will add costs and possibly bailiffs charges to what you owe, so council tax arrears need to be given a high priority because of this.
Sort out the priority debts first
If you have a large debt problem including some priority debts, the priority debts need to be under control before the non-priority debts can be tackled. This essentially means making a separate agreement with each priority creditor to get them to accept £x per month.
Before you start making these offers though, you need to know that you can genuinely afford them over the length of time it is going to take to clear the debts!
Only when you know what all these £x’s add up to will you know how much money you have left to offer to your non-priority creditors.
If it’s not clear that you can resolve the priority debt problems or if you also have benefits problems at the same time, then you should probably get help by visiting your local Citizens Advice. They can be particularly helpful with Council Tax problems. And can help you apply to your council for a Section 13A council tax write off if you have no other options.
The good news is that your other creditors will understand that the priority debts have to come first. They may not like it, but they will accept it.
If you know it is going to take several months to sort out repayment arrangements with your priority debts, think about offering all your non-priority creditors a token payment of £1 a month for this time.
Useful links for specific situations – bailiffs? tax man?
If a debt has been passed to the bailiff, read Bailiffs – what you need to know. That looks at important questions such as whether you should let a bailiff in (normally No!) and whether they could take your car.
If you have income tax or VAT debts, the taxman may want a very short repayment period and won’t freeze interest – as a result, it’s important to get a “time to pay” arrangement with HMRC first. Talk to Business Debtline.
Marie says
My childminder called last night to say her husband had a temperature and as a family they have to be quarantined. I can’t work from home with my 2 year old! I will call up my credit card but what about my car finance? That’s my biggest expense after the rent.
Sara (Debt Camel) says
It is possible this may only last for 2 weeks, then the childminder would be back in action. Have you talked to your employer about options? They may let you take 2 weeks paid leave out of this year’s holiday.
Car finance is a “priority debt” because it is secured on your car. You can ask if you can miss a payment and increase future payments to make it up. My guess is the car finance company will not want to repossess a lot of cars this spring, so they may be more prepared to listen to a sensible suggestion than they would normally. It may help if you have an email from your childminder and one from your employer so you can show that this may only be temporary.
Don’t offer the credit card company too much – they are not your priority, your rent, food and the car are. If you aren’t sure what to say to them, talk to National Debtline on 0808 808 4000.
Didi says
My pay is just cut for 40%
What will i do with rent and bills and my living?😢
Sara (Debt Camel) says
What is your job?
Were you on a zero hours contract or did you have a regular salary before? What has your employer said to you?
Pixie says
Mine to I am on a min wage job contracted 25 hours I’m now on 14 a week due to being cut for a possible 5 months , you have to apply for universal credit and prey you can get £20 left for food a week out of it , seems so unfair doesn’t it ? Iv worked for over 22 years support a my 20 year old still and to be told in just a day your hours are now this , uni credit is about £74 per week very hard to live on , try and get a second job of 10/12 hours maybe ? And ask your employer if they will be flexible around you finding extra work and still keep ,to be fair as they had to cut you . Work two jobs , supermarkets and care for elderly are desperate at the moment with this. Corona . I’m praying the gov bring something into place for workers that have had this instant cut like us and may possibly be able to give a higher rate uni credit for this group until work goes back to normal or hopefully if it dose not collapse goes back to normal say a six month special pay rate .
Evie222 says
I live in London and I was notified today that my workplace will be closed until further notice because of coronavirus. I have a very understanding landlord who has agreed to reduce my rent payments for the next 3 months. I was wondering if it was possible that my council could defer my payments for couple of months. Just very worried about the piling bills and how it’ll all did in the next coming weeks. Government not offering any help to people who privately rent is very worrying.
Sara (Debt Camel) says
It has just been announced in Parliament that the Housing Minister will make a statement about extra protection for people renting in the next few days. I hope that will help you and other enters with less understanding landlords.
Assuming your income has dropped, you should apply to your local council for Council Tax Support – unfortunately this is “localised” so different council help different amounts so I can’t say what you will get… but if you don’t get yours reduced to a very low amount, I suggest you ask your council what extra help is available for those affected by coronavirus as the government has given them extra money for this.
Evie222 says
Thank you for this information Sara. I will wait for the upcoming announcements and I will contact my council tomorrow.
Ned says
Hi Sue,
I’m self employed and work from home but work has dried up due to coronavirus and the lockdown as nearly all my clients were local businesses.
I got in touch with Oodle car finance last week to inform them about my work and financial state but haven’t heard back from them, they usually reply with 72 hours.
It’s my 2nd car with Oodle and I pay £480 per month due to bad credit. First car was £233 per month. On both occasions, Oodle never asked me for proof of my earnings, same as the people above that mentioned about amigo loans.
The payment date is at the end of this month and I’m getting very anxious, so much so that my gums are flearing up. I haven’t defaulted on any payments with Oodle for both cars, been a customer with them for 16 months.
What’s your best advice?
Sara (Debt Camel) says
Can you phone them up? It’s no use me saying that I think they ought to give you a payment break, you need to know if they will.
Do you have other debts as well?
Ned says
Just realised they had a special notice on their website regarding covid-19. I’ve sent them a message again. Their phone lines were jam-packed every day that I called them.
I’m in the web design industry so I could afford the monthly repayment before the coronavirus hit the local businesses hard.
Thankfully, no other debts.
Stuart says
Does any one know if hire purchases are included in this coronavirus payment break such as Perfect Homes!
Sara (Debt Camel) says
Yes, the FCA has put out a separate notice on pay weekly, rent-to-own HP https://www.fca.org.uk/publications/finalised-guidance/rent-own-buy-now-pay-later-and-pawnbroking-agreements-and-coronavirus-temporary-guidance-firms but the main right to a three month payment break is the same as for normal loans.
Art says
Historical Utilities Debt Combined With On-going Usage Paid to 3rd Party:
I have historical electricity debt which was passed to a 3rd party, and have been making a fixed payment to them for a fixed amount each month over the past few years for current electricity usage, with the remainder going towards the debt.
I want to pay it all off as soon as possible, but I’d also like to know exactly of how much has been split between current usage and historical debt, as the total amount still due doesn’t seem to match payments made vs current usage.
I wrote to them a few weeks ago asking for a detailed breakdown of the monthly and total amounts for payments, debt, and on-going usage since debt was passed on to the 3rd party, and any other charges that may have been applied.
I had phoned the 3rd party a couple of weeks afterwards as a follow-up, which was noted, but I still haven’t had a reply. I want to know if I am being treated fairly to begin with, and how well they will manage any additional payments I make.
Do I chase this up again, make a complaint, or do both at the same time?
If I do complain and no progress or resolution is made, do I contact the Ombudsman?
Should I mention the Ombudsman in my next follow up?
Can a company like this possibly structure the administration of my payments in a way that adds on more to the outstanding balance than the historical debt and ongoing usage combined?
Any feedback is appreciated.
Art
Sara (Debt Camel) says
Who is the supplier? Who is the third party? Who are you supplying readings to?
Asking for the breakdown sounds like a good idea. Until you see that you don’t really know what is going on.
Victor says
I agree to your article at least I know now what to do
Nicky says
I struggle financially with priority bills and old loans taken out when I wasn’t mentally at my best and at the time it was an easy affordable option. Since then I’ve been plagued with illness and disability I’ve had two major surgeries and also I’ve takennmy 14vyearcokd son in and I am a lone singke parent so things are tough. I’m hoping to make some affordable changes to heighten my credit score and give me a bit of financial freedom back.
Sara (Debt Camel) says
That sounds difficult. Can I ask how large your priority debts are at the moment? And the non priority ones?
Andrew says
Hi My Name is Andrew and I’m 42 years and I’m my Mum’s Full-Time Carer I was a Professional Bodyguard for 15 Years but due to Severe Anxiety after Working in Lebanon I had to leave so I now Protect my Mum and part of this is I don’t Cook otherwise I’d be more Dangerous than a Sniper I’m Very Depressed and if it wasn’t for my being my Mum’s Full-Time Carer I would kill myself my Life is in a rapid descent and I don’t have anything to Live for and I don’t want to Wake up Tomorrow
Sara (Debt Camel) says
I am sorry to hear this, it’s such an important job being a carer but it can be very hard going.
You can talk to the Samaritans any time of day or night on 116 123 – the calls are free.
There are good forums at https://www.carersuk.org/help-and-advice/get-support/carersuk-forum – you may find it useful to talk to other carers who will know some of the pressure you are under.
Cookie says
Hi there
I have tried to find info on this online and nothing- not sure why. I opened a business right at the start of the covid pandemic and it closed a month ago. I am now in a lot of personal debt. I have come to arrangements with all the companies and I think I can pay most of them except one which is a start up loan I received from GC Finance (a government backed agency). My start up loan is £25k and is taken out generally to set up a business but is actually a personal loan. I called them in a very emotional state worried about how I’d pay back £500 a month- I currently have no job and I’m looking for one now. But even when I get a job I still wouldn’t afford that. From what I gather now from reading your pages, they offered me to pay token payments and asked me what I could afford to pay- I said £25 a month. What I’m worried about is all the debt that’s accruing each month. Do if anyone has been able to offer early settlement payments on these kinds of loans? I can’t find anyone experiencing issues paying back start up loans despite so many start ups going bust! What do you advise I do? I’m trying to pay off other debts first (rent arrears £2k, store cards £3k, natwest personal loan £9k) then work out what on earth to do with the start up loan. Does that sound like the best plan? My anxiety is at an all time high- I’ve never been in such a scary position before.
Thank you
Cookie
Sara (Debt Camel) says
I suggest you talk to Business Debtline about this – they don’t just cover business debts, they also cover personal debts as well. See https://www.businessdebtline.org/.
Lisa says
Can someone contact me about this please
Sara (Debt Camel) says
Hi Lisa,
I suggest you read https://debtcamel.co.uk/bills-debts-help/ which has a section at the bottom about who to talk to, as this depends on what sort of debt problems you have.
zoe says
can u contact me
Sara (Debt Camel) says
Sorry but can you say here what your problem is? No one can see your full name or email address.
Kayly says
Hi Sara.
Would you be able to expand on NIKKI’S comments.
As I’m in the same type of situation.
Iv had a breakdown. Lots of medical issues. Mentally and physically, in and out of hospital (even came out today)
And am struggling with everything, financially, as I’m self employed have my own business. But don’t really understand the financial side of a Business
Can’t afford an account right now, but have asked so many people for help, and really haven’t got very far.
But also I’m desperate for help as mentally iv been asking for help for over a year now to this date.
And also cannot stay or live in my own home, due to the mental cause of issues it’s causing me.
But I also have 4 daughters.
So if you know of anything or recommendations on anything & how to make things easier .,
Also, because I have even stepped away from work, my business due to being unwell &also being treated for a blood clot I Recieved after having the AstraZeneca vaccine (the one time)
Can’t manage or open my mail,
speak over the phone anymore either.
the list could go on. But this last year just over, everything has gone on a downward spiral
I do now receive some extra help with PIP, now accepting me. & I don’t get paid from work. As iv not been there.
But it’s the debts I don’t know how to deal with.
And also managing any type of accounting or book keeping.
Many many thanks
Yours truly and most sincerely
Kayly
Sara (Debt Camel) says
could you manage webchat?
where do you live?
Donna miller says
I have a 400 overdraft with my bank trying to pay it off but my money from work keeps going down
Sara (Debt Camel) says
Your options are different depending on the rest of your finances: do you have other debts as well? are you behind with any important bills?
Sheila says
I have a default with very I will try to clear that. I have a default on a contract phone that I am not using because I lost the goggle password.
I can try to clear both it will take two or three months to finalize.
Clara says
I was stuck in Africa during the pandemic for 10months, and came back to £16,000 debt from credit cars and rent. I don’t know how to deal with this. Any advice will be appreciated, thanks
Sara (Debt Camel) says
are the rent arrears on a place that you currently live in? is it private rented?
what is your current financial situation like apart from the debts – are you in work? up to date with bills etc?