Priority Debts

Category: Finance, Credit.

To better help you to read this article, here are some definitions.

A debt can be categorised as bad where it is unlikely that the credit provider will ever be able to recoup the money. A bad debt is borrowing where the debt has not been reimbursed according to the terms and conditions of the borrowing contract. Having a bad debt on your file will make it more difficult if you want to get further credit at a future point. It offers( free of charge) , individual and private counselling to individuals on dealing with debt difficulties in Britain. The National Debt Line is a nationwide phone- in helpline. Their telephone helpline can be reached all week long and there is also a website that offers lots of constructive help and advice on it.

The Money Advice Trust provides persons a strategic approach to controlling serious personal debt so they might take back proper control of their financial affairs. The National Debtline is an element of the Money Advice Trust or MAT for short, and is a fully registered charity. There are two types of debt- priority debts and non- priority debts. That way, you can make sure that any money you have left every month to pay for debts goes towards the most important( ie: the priority debts) first. If you are experiencing financial difficulty and are unable to service all your debts, it is important that you understand the type of debts you have. Priority debts.

The amount of the debt does not make it a priority, but what the creditors can do to recover their money from you that makes it a priority debt. These debts are where the companies you owe money to- the creditors- have the power to take severe legal actions against you if you fail to pay. Examples of priority debts: . Rent arrears? you can be evicted by your landlord if you are in arrears. . Mortgage arrears- your mortgage lender can repossess your home. . Fines- fines such as those for traffic offences or magistrates court fines- child support, council tax or, maintenance rates. If you still owe money after this, you can be sent to prison. .

The Court can instruct bailiffs to possess your goods. VAT and income tax- you can be imprisoned for non- payment of income tax or VAT or at the very least, made bankrupt. . Utility debts( eg gas, electricity debts) - your utility supply will be disconnected. Hire purchase- it depends on what the item, is, but, it will be, for example a priority debt if it is a car and you need it to get to work- if you do not pay the debt, it will be repossessed. . These need to be repaid before your non- priority debts, so do not offer to repay any of your non- priority debts before dealing with these. However, you still do need to make an offer to pay? otherwise your creditors will still take you to Court- and could send the bailiffs in.

For non- priority debts, you are unlikely to lose the roof over your head or get imprisoned. Examples of non- priority debts: . Arrears on credit or store cards. . Overpayments on benefits. . Overdrafts and loans( unless the loan is secured against your property, then it becomes a priority debt) . Hire purchase- goods on HP that are non- essential, such as sofa or audio equipment Catalogue arrears. .