What are Priority Debts
Priority debts are those debts that take precedence over other debts. These debts typically include rent, mortgage payments, utilities, taxes, and court-ordered payments, like child support. It’s important to pay these debts first as they often carry with them more severe consequences if you miss or are late on payments. Penalties such as late fees, additional interest and legal action can be taken if you do not pay priority debts. It’s important to budget carefully and make sure you are able to pay these debts before any other debts so that you don’t face additional penalties.:
Rent or Mortgage – Obviously you would want to keep a roof over your head, so for most people this priority debt would come top of the list.
Utility Bills – Gas, Electric, Water, Heating Oil Etc. In extreme cases you could be cut off by the supplier.
Taxes – Council Tax, Inland Revenue Taxes etc. When it comes to taxes, the collection process can be quite ruthless which can involve the seizure of goods. Also according to the Debt Advice Handbook, this can also include imprisonment.
Unpaid Fines and Maintenance – Possible imprisonment.
Hire Purchase Arrears – Goods can be repossessed.
TV Licence – This is a tricky one and worth investigating further, to see if you should pay.
What are Non Priority Debts
Non-priority debts are debts that are not considered to be of utmost importance by creditors. This type of debt includes credit cards, medical bills, personal loans, or any other type of debt that is not considered to be a priority. Non-priority debts are often seen as less important because they are not secured by any type of collateral, so they are not considered to be as urgent as priority debts. Examples of priority debts would include mortgages, car loans, or any other type of debt that is secured by collateral. Non-priority debts can still be important, especially if they are large amounts, but they are not seen as being as urgent as priority debts.
What Should I do if I am Having Difficulty Paying All my Debts
If you are struggling to pay your debt, there are a few steps you can take. First, take a look at your budget and see where you can cut back spending. You may also want to look into refinancing your debt to get a lower interest rate. Additionally, you may want to consider talking to a credit counsellor to help you create a plan to pay off your debt. Finally, if you are having trouble making payments, contact your creditors and explain your situation. They may be willing to work with you on making a payment plan that fits your budget.
Do a full financial fact find on yourself, you will then have a very good idea of your current financial situation. When completing the Income and Expenditure (I&E), complete it so that you are paying your Priority Debts in full. Once you have completed the I&E, you will have a clear overview of what you can and cannot afford to pay. This page has a link to the Income and Expenditure Form.
Talk to All Your Creditors
Talking to all your creditors to see what savings can be made is an important step to managing your finances. It is important to research different repayment plans and options, and to communicate with your creditors to ensure you get the best deal possible. Creditors are often willing to work with you to find a repayment plan that is affordable and fits within your budget. By talking to your creditors, you may be able to negotiate lower payments, lower interest rates, or even a reduction in the amount of debt you owe. This can help you save money and free up more of your income for other expenses. Yes, you may also be able to negotiate with Priority Creditors and make reduced payments to them.
Just remember non priority creditors will shout the loudest and often threaten the most, but they are less important than the priority creditors.
Why do creditors for non priority debts more aggressive?
Creditors for non-priority debts are often more aggressive because these debts are typically unsecured, meaning they are not backed by collateral. Priority debts, on the other hand, are usually associated with specific assets or have legal priority over other debts.