Work out which debts to deal with first
Coronavirus – if you’re struggling to pay your debts
You might have less money to pay your debts because of coronavirus.
Check what help you can get if you're finding it hard to pay your bills or are worried about being evicted.
'Priority debts' are debts that can cause you particularly serious problems if you don’t do anything about them.
You need to work out which of your debts are priority debts and deal with them first. Make sure you’ve collected together information about all of your debts.
1. Identify and deal with your priority debts
you’re struggling to deal with your priority debts
you have more than 1 priority debt and you need help deciding which to deal with first
If you've got any of these, they're your priority debts:
This is a priority debt because your landlord might evict you from your home if you don’t pay.
Before your landlord can evict you, they’ll need to follow the correct eviction procedure to get a 'possession order' - this says when you have to leave. If you don’t leave by the date on the possession order, your landlord can get sheriff officers to evict you.
Find out how to deal with your rent arrears:
Mortgage arrears or secured loan arrears
These are priority debts because your bank or building society might evict you and take your home if you don’t pay.
Before they can evict you, they’ll need to go to court to get a ‘possession order’ - this says when you have to leave. If you don’t leave by the date on the possession order, your bank or building society can set a date for your eviction and ask sheriff officers to evict you.
Council tax arrears
This is a priority debt because if you don’t pay, your local council will usually ask the sheriff court to send you a demand for payment. This is called a 'summary warrant'.
Once the council has got a summary warrant, it then needs to send you a demand to pay. This is called a 'charge for payment'. If you don't pay the council tax within the time limit, the council can take steps to get the money from you. For example, the council might be able to take money from your earnings or from your bank account.
Gas or electricity bills
If the debt is with your current supplier it’s a priority because they might cut off your gas or electricity if you don’t pay.
Before they disconnect you, your supplier must give you a chance to pay your unpaid bills through a payment plan. They must give you 7 days’ notice in writing before they cut off your supply.
Phone or internet bills
These might be priority debts because your supplier can cut off your phone or internet if you don’t pay.
They're only priority debts if it’s really important that you can use a phone or the internet. You might, for example, rely on them because you:
have a disability or long-term health condition
need them for your job
are looking for work
If it’s really important for you to use a phone or the internet, tell your supplier when you contact them.
TV licence payments
This is a priority debt because you could be fined by the sheriff court if you watch TV without a licence. Check if you need a TV licence on the TV Licensing website.
These are priority debts because strong action can be taken against you if you don't pay. For fines over £500, in rare circumstances, you could be sent to prison if you don't pay.
You might get a court fine if you commit a crime, for example:
- speeding or breaking other rules while driving
- watching TV without a TV licence
Overpaid tax credits
HM Revenues and Customs (HMRC) will tell you if you’ve been overpaid tax credits.
This is a priority debt because if you don't pay, HMRC can:
- take the money from your wages - this is called a direct earnings arrestment
- take the money from your benefits or tax credits
HMRC will warn you if they’re going to do this but they don’t have to go to court first.
If you have the money but choose not to pay back a tax credits overpayment, HMRC can take you to court.
Payments for goods bought on hire purchase or conditional sale
If you buy something on hire purchase or conditional sale, you pay for it in instalments and you don’t own it until you finish paying. If you’re not sure if you bought something on hire purchase or conditional sale, check your contract.
This might be a priority debt because the creditor could take back the goods you bought. If you keep the goods in your home or you’ve paid back more than a third of the cost, the creditor has to go to court to do this.
Hire purchase and conditional sale payments are only priority debts if the goods you bought are really important. For example they might be really important if you need them to:
get around - such as a car if there’s no public transport
store medicine - such as a fridge
Unpaid income tax, National Insurance or VAT
These are priority debts because if you don’t pay, HM Revenues and Customs (HMRC) can:
- take the money from your wages
- go to court to get an attachment order - this can then be enforced by seizing your goods
If you have the money but choose not to pay, HMRC can take you to court.
Find out how to deal with unpaid income tax, National Insurance or VAT on Business Debtline’s website.
Unpaid child maintenance or child support
This is a priority debt because the Child Maintenance Service or Child Support Agency can take the money from your wages or bank accounts if you don’t pay.
They’ll warn you if they’re going to do this but they don’t have to go to court first.
If you have the money but choose not to pay, you could be sent to prison. You won’t go to prison if you can show you can’t pay.
If you don’t pay, the sheriff court can also take away your driving licence or passport for up to two years.
2. Deal with your other debts
Once you’ve got your priority debts under control, you should look at all your other debts. They’re ‘non-priority debts’ because the problems they cause are less serious.
Check how to ask your other creditors to stop chasing you while you deal with your priority debts.
Your non-priority debts might include:
credit card or store card debts
unsecured loans including payday loans
overpayments of benefits - apart from tax credits
unpaid parking tickets - these are called Penalty Charge Notices or Parking Charge Notices
money you owe to family and friends
If you don’t pay these debts, your creditors can take you to court to get you to pay - check what to do if you’re being taken to court.
If you owe money to family and friends, it might help to tell them you have other debts. They might offer to wait until you’ve paid off your other debts before asking you to pay them back.
If you were an additional cardholder
If you were an authorised additional cardholder on a credit card account, the credit card company can't ask you to repay any debts on the card. These are always the responsibility of the main cardholder.
Non-priority debts that could have serious consequences
If there could be serious consequences for not paying a non-priority debt, your client can give it priority over other non-priority debts. A non-priority debt might have serious consequences if, for example:
your client is lodging with a friend and owes them money - if they don’t pay, the friend could make them leave
your client owes money to a friend or family member and not paying is likely to cause serious personal problems
your client owes money to their employer and they could lose their job if they don’t pay it back
If your client gives a non-priority debt priority over other debts, they should explain why to their other creditors.
Check if you could increase your income to help you deal with your debts.