Why some debts are more important than others

If you are struggling to repay what you owe, National Debtline recommends working out which debts are priorities and meeting them first. In this article, the charity outlines which bills are the most important.

Some debts are more important than others. The law gives different creditors different ways of getting their money back.

If you don’t act quickly, some creditors could: take away your home (called ‘repossession’ or ‘eviction’); cut off your gas or electricity (disconnection) - the law has changed and your water company cannot disconnect your water supply; send the bailiffs to take furniture from your home (called ‘distraint’); or ask the magistrates’ court to send you to prison.

The chart below tells you what might happen if you delay sorting out different debts.

These are all priority debts. It is important to use your money for creditors to make agreements to settle these debts first.

Creditors can take action on some priority debts without going to court first. For example, gas and electricity companies can disconnect you. HM Revenue & Customs can send bailiffs without a court order for VAT and income-tax debts. Your other priority creditors can take action against you only after court action.

But don’t panic. You will always be given warning and, as long as you act quickly, you should be able to stop these things happening.

Debt

Possible action against you

 TV licence

 Fine in magistrates’ court, distraint
or imprisonment

 Mortgage arrears

 Repossession of your home

 Second mortgage or secured loan

 Repossession of your home

 Rent arrears

 Eviction from your home

 Council Tax and community charge

 Distraint or deduction from wages,
deductions from some benefits or
imprisonment

 Gas or electricity

 Supply cut-off

 Magistrates’ court fines

 Distraint or deduction from wages,
deductions from some benefits or
imprisonment

 Maintenance

 Distraint or deduction from wages,
deductions from some benefits or
imprisonment

 Hire purchase or conditional sale

 Repossession of the goods or a court
order to hand them back

 Income tax, National Insurance
and VAT arrears

 Distraint or bankruptcy

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