What are priority debts?

Some debts are more urgent than others because the consequences of not paying them are more severe than for other debts. These debt are known as priority debts.

Here are some examples of priority debts:

  • Electricity arrears. If unpaid, your electricity supply may be disconnected.
  • Mortgage arrears. If unpaid, your house may be repossessed by the bank. You will lose all the money you repaid to date and you will be left without a home.
  • Income Tax arrears. If unpaid, bailiffs may be sent to collect your assets to be sold on auction to cover the overdue amount. You are also at risk of being made bankrupt, having your earnings attached and or a charging order.
  • VAT arrears. If unpaid, bailiffs may be sent to collect your assets to be sold on auction to cover the overdue amount. You are also at risk of being made bankrupt, having your earnings attached and or a charging order.
  • Child Maintenance arrears. Failure to pay may end up with an attachment of earnings or even jail time.
  • Child Support arrears. Failure to pay may end up with an attachment of earnings or even jail time.
  • Fines imposed by a Court such as speeding or parking fines. If left unpaid expect a visit from the bailiff or even jail time.
  • Gas bill arrears. If unpaid, your gas supply may be disconnected.
  • Rental arrears. In unpaid, you may be evicted and left without somewhere to live.
  • Telephone arrears. If left unpaid, it will be disconnected.
  • Hire purchase. If unpaid, your car may be repossessed by the bank. You will lose all the money you repaid to date and you will be left without a car.

The above list in not exhaustive. There are many other priority debts. In some cases the priority of a debt may depend on your own specific circumstances. For example if you rely on your car to make a living and you get into arrears with your payments, this is a priority debt. You would need to make payments to stop your car from being repossessed to protect your ability to make an income.

You must five careful consideration to which debts you treat as priority debts. You may at some point have to justify to the court or your creditors how you came to decide which of your debts were priority debts. Needless to say, the creditors whose debt you have not classified as a priority debt will be most critical of your assessment.

Should on of your creditor’s feel that you are treating another creditor with undue favoritism, they may not accept a new repayment proposal and they may take legal action against you. At the end of the day, each creditor wants to be the first to be paid.