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Priority and Non-Priority
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Priority and Non-Priority
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Priority and Non-Priority Debts
Priority Debts
Priority Debts
The worst thing you can do is to try to ignore your financial problems. If you get a letter or a phone call from a creditor you should not ignore it!
The first debts you're going to want to address are your priority debts. As mentioned on the 'Make a Budget' page, the following debts are typically referred to as priority debts:
The first debts you're going to want to address are your priority debts. As mentioned on the 'Make a Budget' page, the following debts are typically referred to as priority debts:
Council tax arrears Mortgage arrears Court fines Income tax or VAT arrears Child support Rent arrears Fuel arrearsIf your priority creditors are threatening to take court action against, you can send them a holding letter explaining your problems. Tell them that you will contact them in the next two to three weeks. They will likely give you some time to start your financial planning but do not take advantage of their good will.
If you think that you can use your budget to help pay back your debt in a timely fashion then start paying back your debts. Your creditors may let you pay back a bit extra each month until the arrears are cleared. This is probably the best option.
Non-Priority Debts
If you are able to pay back your priority debts then the next thing you'll want to address is your non-priority debts. As mentioned on the 'Make a Budget' page, the following debts are typically referred to as non-priority debts:
Parking penalties Student loans Borrowed money from friends Borrowed money from family Benefits overpayments Credit debts Overdrafts Hire purchase Catalogues Loans Credit Card AccountsThe way you should deal with your non-priority debts will depend on whether you have any money left over at the end of each month.
You may not have any spare money after paying for your essential household expenses and priority debts. If this is the case you're going to have to weigh out the advantages of each of the following options:
Make offers to creditors by yourself. Get a debt management firm. Consolidate your loans. Arrange for an IVA through IVA.net or another reputable provider.If you don't have enough money to spare after your other payments are covered each month then you may need to sell off assets like your home or car to pay back creditors. The other two options are to ask your creditors to write off your debt or to apply for bankruptcy.
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