Some debts are more important than others. Knowing which debts should take priority can help you to keep your home.
Some debts are called priority debts because there are serious consequences if you don't pay them. Priority debts should be dealt with before your non-priority debts.
Priority debts include:
- mortgage repayments and loans secured on your home
- gas and electricity debts
- council tax
- certain payments ordered by the courts
Child support and maintenance payments are also considered priority debts, as are payments for your TV licence.
Make sure you get help with debts before they build up. There are consequences if you don't pay a priority debt. For example you could:
- lose your home through mortgage or rent arrears
- have your gas or electricity supply cut off, or have to accept an expensive prepayment meter instead
- lose belongings on hire purchase such as a car, furniture or other goods
You could go to prison if you don't pay your council tax, TV licence, taxes or magistrates court fines.
Failing to pay non-priority debts is usually less serious than not paying a priority debt.
However, your creditors (the people that you owe money to) may sue you for any money that you owe them. This could result in a county court judgment against you.
Non-priority debts include:
- credit card debts
- hire purchase agreements
- unsecured bank and payday loans (loans that are not secured against your property)
- water bills
- loans from friends and family
Find out more from StepChange about problems with payday loans.
When a creditor gets a county court judgement against you, you must keep to the terms of the court order. If you don't, for example you fail to pay a certain amount each month, your creditor can go back to court and apply to enforce the debt.
Depending on the amount of the debt and your circumstances, your creditors could ask the court to send bailiffs to seize your non-essential goods or make you bankrupt. If you are a homeowner, this could result in you losing your home.
Find out more from Citizens Advice about dealing with debt collectors.
Get help with debt problems
For more information about managing your debt, contact a specialist debt adviser.
Use budget tool from Citizens Advice to help you organise your finances and prioritise your debts.
Last updated 01 Jan 2015 | © Shelter
Still need help?
If you need to talk to someone, we’ll do our best to help