Priority debts are debts owed to creditors who can take the strongest legal actions against you if you do not pay. It is not the size of the debt that makes it a priority, but what the creditors can do to recover their money.
Some examples of Priority debts are:-
- mortgage arrears - the mortgage lender can take court action for possession of your home
- rent arrears - the landlord can evict you if you have rent arrears.
- Income tax and VAT - you can be made bankrupt or imprisoned for non-payment of income tax or VAT
- Fines, such as magistrates court fines for traffic offences or TV licence. If these are not paid, the court can use bailiffs to repossess your goods. If, after this, you still have arrears unpaid, you may be sent to prison
- Maintenance, child support or, council tax or rates. If these are not paid, a court can use bailiffs to repossess your goods. If, after this, you still have arrears unpaid, you can be sent to prison.
- fuel debts - if these are not paid, you can have your fuel supply disconnected
- hire purchase (sometimes called 'conditional sale') will be a priority debt if it is for an essential item, for example, if you have bought a car on HP and need the car to go to work.
If you have any of these debts, you must deal with them before you offer to repay any of your secondry/non-priority debts.