Start by making a list of who you owe money to and how much you owe them.
When you’ve made a list of all the money you owe, you need to work out which debts are the most urgent. Some of your debts are more urgent than others. This is because the consequences of not paying them can be more serious such as:
- losing your home
- disconnecting your gas and electricity
- being imprisoned
These are known as priority debts.
Less urgent debts are known as non-priority debts. You might feel pressure to pay these, but you must pay the priority debts first. Not paying them could lead to significant consequences.
Priority debts include:
- mortgage, rent, or service charge arrears – if you don’t pay these you could lose your home
- gas and electricity arrears – if you don’t pay these, you can have your supply disconnected
- Council Tax arrears – if you don’t pay these, an enforcement agent could take your goods, or you could have money taken from your benefits or wages or even be sent to prison
- magistrates court fines – if you don’t pay these, an enforcement agent could take your goods or even send you to prison
- maintenance arrears for children or ex-partners, including arrears to the Child Support Agency – a court can use enforcement agents to take your goods or even send you to prison if you do not pay
- TV licence or TV licence arrears – it’s a criminal offence to use a television without a licence and you could be fined and sent to prison if you don’t pay the fine
You may have other debts which are very important for you to pay. For example, if you need a car to get to work or due to your disabilities, you may need to make sure you keep up to date with the payments.
You need to think carefully about which debts you treat as the most important ones. You must have good reasons. You might have to convince a court or your other creditors why you think these debts are more important than others.
You should contact your priority creditors with a copy of your budget sheet showing your payment offer.
If you’re not sure if your debts are priority debts, or if court action has been taken, or if you need help making offers to your creditors, please seek further advice.
