Priority debts are debts that are classed as more important than other outgoings because of the consequences of not paying them; these include items like mortgages or rent. If creditors are not aware of any financial difficulty, they may start to take action against you, such as:

• Repossession of your home or eviction
• Enforcement agents (or bailiffs as they are commonly known) could remove your belongings from your property.
• Cut energy services
• Issue a claim form for unpaid debts, potentially resulting in a County Court Judgement or CCJ

To help you take control of your finances, we’ve drawn up with a step-by-step guide to help you stay out of the red.

Priority debts usually include:

• Mortgage/rent
• Council tax
• Energy bills
• Tax debt
• Tax credit overpayments
• Child maintenance
• Hire purchase or conditional sale
• Magistrates’ court fines
• Benefit overpayments
• Parking penalty charges
• Social fund loans
• TV licence

Contact your creditor

When struggling to make debt repayments, you should contact your creditors to explain your financial situation. Do this as soon as you can to prevent payments from spiralling out of control. Explain why you are in arrears and ask for more time to make a payment if you can’t agree a new repayment plan straight away.

Pay what you can

It is important that you pay as much money as possible towards priority debts, without missing ongoing payments. Speak to your creditors about altering your payments if they are becoming unmanageable.

Create a budget sheet

A personal budget sheet will help you identify all of your income and outgoings to work out what you can realistically afford to repay each month. Creditors will need to understand if what you are asking for is reasonable, so be prepared to hand over a copy of your budget sheet in case creditors ask to see it.

Creditor Action

It can be daunting if you’ve received an action letter from a creditor. Do not ignore it, read it through carefully and seek advice. The Citizen’s Advice Bureau is a good place to start and may be able to stop things escalating further.

Look at where you can save

Look at your budget sheet carefully to understand if there are any savings to be made. If all of your expenditure is essential, are you potentially missing out on any financial assistance such as tax credits or incapacity benefit? Your local Citizen’s Advice Bureau will be able to help you with this.

Make a complaint

If you believe you have been treated unfairly by a creditor, you shouldn’t be afraid to make a complaint to The Financial Ombudsman service.
If you are struggling with debt and don’t know which way to turn, it is important that you don’t suffer in silence. Seek help immediately via your creditor, a government agency, or a debt solutions provider.

Author: boss

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