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Dealing with priority debts
This information applies to Scotland only
Dealing with priority debts
If you're in debt, it's important to keep in contact with the people you owe money to (your creditors). If you're very worried about your debts, don’t be afraid to contact them. If your creditors don't know you're having financial difficulties, they might assume you don't want to pay and start taking action against you.
Before you start contacting your creditors, you'll need to sort out how much money you owe and who you owe it to.
You'll need to sort out which are the most urgent debts to pay and if you've got enough money to do this.
You need to deal with some debts more urgently than others because the consequences of not paying them can be very serious. These are known as priority debts and include things like mortgage and rent. The people you owe this type of debt to are called priority creditors.
To check if you've got enough money to pay off your priority debts, you will need to work out how much money you've got coming into your household (income) and how much you need to spend (expenditure). This is called your budget.
You can deal with any less urgent debts such as credit card debts, overdrafts and other loans. These types of debts are known as non-priority debts.
Harassment by creditors
Don't think that a debt is a priority debt just because the creditor is harassing you to pay the debt.
Harassment of people in debt by creditors or their agents is a criminal offence under the Consumer Protection from Unfair Trading Regulations 2008. The regulations prohibit aggressive commercial practices, including aggressive practices used by creditors to pressurise debtors into paying their debts.
For more information about harassment, see Harassment by creditors. National Debtline also has a factsheet for the public about how to deal with harassment by creditors. The factsheet is available on the National Debtline website at www.nationaldebtline.co.uk.
If you haven't got enough money to repay your priority debts, you need to get advice as quickly as possible as the outcome could be serious.
Your local Citizens Advice Bureau can give you advice about debt problems. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
Which debts are priority debts
Priority debts include:-
- mortgage or rent arrears. If you don't pay these, you could lose your home
- gas and electricity arrears. If you don't pay these, you can have your supply disconnected
- council tax arrears. If you don’t pay these, the local authority can go to court and get a summary warrant to enforce the debt
- court fines such as fines for driving offences. If you don't pay these, the creditor can get a court order to arrest your wages or freeze your bank account. If, after this, you still have unpaid arrears, you can be sent to prison
- arrears of maintenance payable to an ex-partner or children. This includes Child Support you owe to the Child Support Agency. If you don't pay this, the creditor can get a court order to arrest your wages or your bank account. If, after this, you still have unpaid arrears, you can be sent to prison
- income tax or VAT arrears. You can be sent to prison for non-payment of income tax or VAT
- TV licence or TV licence arrears. It’s a criminal offence to use a television without a licence. You could be fined.
Essential goods due to personal circumstances
You may have other debts which you think it is particularly important to pay. For example, if you're disabled and rely on your car to get around, you may need to make repayments on a hire purchase agreement for your car a priority, to prevent it being repossessed.
You need to think very carefully about which debts you treat with priority. You must have good reasons, as you might have to convince a court or your other creditors why it is reasonable for you to treat these debts as more important than others.
If creditors feel you are treating another creditor more favourably, without a good reason, they may not accept your offer and may decide to take further action against you.
For more information about debts which are considered less urgent than priority debts, see How to sort out your debts and How to deal with creditors of non-priority debts.
How to deal with priority creditors
Don't ignore letters or phone calls from your priority creditors. Get in touch with them as soon as possible and explain to them why you are in arrears with your payments.
It's best to contact priority creditors by phone if you can to sort things out more quickly. Make a note of all telephone calls and meetings, including the name of the person you spoke to and what you agreed. If you phone, you should follow up the call with a letter, confirming what you said on the phone. Keep copies of any letters you write to them. If you don’t think you are talking to the correct person ask who is in charge of your account. You can get help to contact your creditors if you are anxious about doing this.
When you contact your creditors, explain why you're in debt. If you can't make an offer of repayment straight away, ask for more time, for example 14 or 28 days, while you get advice and work out your budget. See How to work out your budget.
It's important to try to pay at least the regular instalment in the meantime. If you can't do this, pay as much as you can afford and get help as soon as possible.
An advice agency such as your local Citizens Advice Bureau can help you get in touch with your creditors. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
If your priority creditors are threatening to take court action or have started to take court action against you contact them straight away. If they haven't started court action yet, ask them not to take any further action for two weeks so that you can work out an offer and contact them again. If they have already begun court action, they may still be able to reach an agreement with you and in some cases may be willing to stop the action. This will depend on the type of debt and how much you owe.
Even if a priority creditor continues to take you to court, you will usually be able to make an offer of repayment. The court papers you receive will tell you what you should do and by what date.
If you can't afford to pay anything
Once you've sorted out your finances, if you can’t afford to pay anything to your priority creditors you should get advice straight away. An adviser will be able to help you work out what is the best thing to do in your situation. Tell the creditor that you are getting advice and will contact them as soon as you can. Ask them to stop further action for a few weeks while you get advice.
Your local Citizens Advice Bureau will be able to advise you. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
If you can afford to make payments
If you do have some money to pay back your priority creditors, contact each one and try to make an arrangement to pay back what you owe. You can either do this yourself, or get the help of an experienced debt adviser.
New Code of Conduct for lenders
Creditors have a voluntary code of conduct. It includes guidance about what they should do if someone is in financial difficulties. It is called the Lending Code and it sets standards for unsecured lending which banks, building societies, credit card companies and other subscribers should follow. The Code covers overdrafts, loans and credit cards. It includes commitments to provide breathing space for those in financial difficulties, and guidance and support for indebted individuals who have mental health problems. Section 9 of the document may be particularly helpful. The document is available on the Lending Standards Board website at www.lendingstandardsboard.org.uk.
What you should say to your priority creditors
Most creditors will consider an offer of repayment that you make and a voluntary code of conduct exists that you can remind them about if they aren’t cooperative. What you ask your creditors for will depend on your financial circumstances, including:-
- how much money you've got to pay your priority creditors
- how many priority debts you have
- whether or not your situation is likely to get better.
It’s important that creditors can understand that what you are asking for is reasonable in the circumstances. So make sure you give them a copy of your budget sheet and explain your situation fully.
If your problem is short term
You might not be able to pay off anything towards your debts at the moment because you've lost your job, or are off work unwell. Make sure your creditors know about your circumstances, as they might be prepared to give you extra time to pay up if this is only short term because:-
- you're going back to work
- you're going to get benefits
- you're getting a pay out from a Mortgage Payment Protection Insurance policy or a loan
- you're going to sell some of your belongings to help pay your debts.
For more information about payment protection insurance, see payment protection insurance factsheet [
42 KB].
If you're offering to pay back extra at regular intervals
You might want to ask your creditors if you can pay back an extra amount at regular intervals until the debt is cleared.
You need to be clear about what you are asking for. Tell your creditors whether the repayments will be on a weekly or monthly basis.
You also need to be sure that you can afford the amount you are offering to pay. To work out how much you can afford, you will need to look at your budget. See How to work out your budget.
Don't forget to mention any changes that you know are going to happen which will affect your ability to pay or the amount you are offering.
Your local Citizens Advice Bureau can help you negotiate with your creditors. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
How to deal with mortgage arrears
It's important to deal with mortgage arrears straight away. If you don't you may lose your home. There are a number of ways that you can deal with mortgage arrears. Depending on the type of mortgage you have it may be possible to:-
- pay interest only
- add the arrears on to the total amount you owe
- pay by instalments
- change to a repayment mortgage
- apply to a mortgage rescue scheme.
If you get certain benefits, you may be able to pay off the arrears direct from your benefit.
For more information about how to deal with mortgage arrears, see How to sort out your mortgage problems.
How to deal with rent arrears
If you get behind with your rent payments and don't sort it out, you could lose your home. You may need to get specialist help to make sure the rent arrears you're being asked to pay is correct.
If you rent from a Residential Social Landlord (RSL)
If you rent from a residential social landlord such as a Housing Association or Local Authority, the landlord should accept a reasonable offer of repayment. Make sure you keep paying your regular rent amount. Contact the landlord with a copy of your budget and ask them to accept an extra payment each month (or week) on top of your rent to repay the arrears. Start paying the amount you offer as soon as you can.
If you get a means-tested benefit you may be able to pay the arrears back by direct deductions from your benefit. Check with the Department for Work and Pensions (DWP) if this applies to you.
If you rent from a private landlord
If you rent directly from a private landlord or through a lettings agency, you should come to an arrangement as soon as possible about how you are going to continue paying the rent as well as making some contributions towards the arrears. If you owe rent arrears to a private landlord, you should get advice straight away.
Your local Citizens Advice Bureau can advise you about your rent arrears. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
For more information about how to deal with rent arrears, see the Rent arrears fact sheet [ 40 KB].
How to deal with gas and electricity arrears
Gas and electricity providers have to take into account your ability to pay and should consider a reasonable offer to repay arrears by instalments. You may need to get specialist help to make sure the amount you're being asked to pay is correct. In some cases you might be offered a pre-payment meter as an alternative to being disconnected.
The meter must be set to recover arrears at a level that you can afford. You may be able to challenge the rate of recovery of arrears, or the disconnection of your supply, on the grounds that the supplier has not complied with its standard licence conditions of protecting those who cannot afford to pay.
If you get a means-tested benefit you may be able to pay the arrears back by direct deductions from your benefit.
For more information about gas and electricity arrears, see the Gas and electricity arrears fact sheet [ 42 KB].
How to deal with council tax arrears
Local authorities have some freedom of choice about how to collect council tax arrears. They may agree to spread the arrears over the rest of the council tax year or add it to the next year's bill. You may need to get specialist help to make sure the tax you're being asked to pay is correct.
If you are having problems getting your plan agreed, get advice, for example from a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
If you get certain benefits, you may be able to pay the arrears back by direct deductions from your benefit. Check with the Department for Work and Pensions.
In some circumstances, the local authority or the court can agree to write off (remit) a debt if you can show that you can't pay anything. You will still need to pay your ongoing bill.
You should make an arrangement as soon as you know about the arrears because the local authority has powers to go to court and get a summary warrant to enforce the debt, by for example, arresting your wages. They can also ask for deductions to be made from certain benefits. The local authority legally has to offer you some time to pay the arrears.
If you need help sorting out council tax arrears, you can get free advice, for example from a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
How to deal with child support and maintenance arrears
Child support arrears
If you are behind with payments of child support, you should contact the Child Support Agency (CSA) straight away to make an arrangement to pay. If you don't, the CSA will apply for a deduction from earnings order which allows them to take money direct from your wages. The amount they can take is set.
The CSA should try to contact you to make an agreement to pay the arrears as soon as a payment is missed. If you don't come to an arrangement with the CSA to repay what you owe, after four months the debt will be passed to the CSA specialist enforcement unit. This unit can take further action through the courts.
If this happens, get advice straight away.
For more information about child support arrears , see the Child support and maintenance arrears fact sheet [ 110 KB].
Maintenance arrears
If you fall behind with payments of a court order for maintenance, you can go back to the court and ask them to change (vary) the order to an amount you can afford. If you don't do this, you will be ordered to appear in court to explain why you haven't paid. You can still come to an arrangement to pay.
For more information about maintenance arrears, see the Child support and maintenance arrears fact sheet [ 110 KB].
If you need help sorting out maintenance arrears, you can get free advice, for example from a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
How to deal with income tax arrears
If you have arrears of income tax, you should contact HM Revenue and Customs (HMRC) as soon as possible. Ask them to hold off action while you get advice or work out what you can afford to pay.
You may need to get specialist help to make sure the tax you're being asked to pay is correct. You can get help from an accountant or Business Debtline or TaxAid.
If you run a small business and it is still trading, you will need to treat the debt as a priority. Otherwise, HMRC can seize your essential goods without a court order which may mean your business has to close.
HMRC may agree to write off a debt in exceptional circumstances, for example if you can't afford to pay the debt and you can show that your circumstances won't improve because of illness or your age. If this applies to you, get help from a specialist adviser.
For more information about income tax arrears, see the Income tax arrears fact sheet [ 43 KB].
If you need help sorting out income tax arrears, get advice, for example from a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
How to deal with court action
A creditor may threaten to take you to court. However, they usually have to send you a written notice first, warning you that they will start court action if you don't settle your debt.
If court action has started, read the papers you get carefully and make sure you reply to letters from the court within the time limit. Get advice if you don't know how to fill in the forms. If you've already worked out a budget, you can use this to help you fill out the form and to work out how much you can afford to pay.
If there's a court hearing, make sure you go to it. If you have time before the court date, try to speak to an adviser. They can help you work out what to say in court and some advisers can go to court with you, if you need it. If you go to the court on your own, check with the court staff whether there is a duty solicitor or advice service available in the court.
If your offer is refused or you don't accept that you owe the money, you should get advice from an experienced debt adviser.
If you have to go to court for a priority debt, get advice, for example from a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
For more information see What happens if you are taken to court for money you owe
If the creditor is successful in getting a court decree further action to force you to pay can be taken against you, see Action the creditor can take.
Further information
Business Debtline
TaxAid
