When you are in debt, some debts should always be paid first. Knowing which debts should take priority can help you to keep your home. It’s important to understand what happens if you don’t pay.

Some debts are called priority debts because if you do not pay them you could face serious consequences. Priority debts should always be dealt with BEFORE your non-priority debts.

Priority debts include:

• mortgage repayments and loans secured on your home
• rent
• gas and electricity debts
• council tax
• certain payments ordered by the courts.

Child support and maintenance payments are also considered priority debts, as are payments for your TV licence.

There are serious consequences if you don’t pay a priority debt. For example you could:

• lose your home through mortgage or rent arrears
• face action by enforcement agents (previously known as ‘bailiffs’)
• have your gas or electricity supply cut off, or have to accept an expensive pre-payment meter instead
• lose belongings on hire purchase such as a car, furniture or other goods.

Failing to pay non-priority debts is usually less serious than not paying a priority debt.

However, your creditors (the people that you owe money to) may take enforcement action against you if you do not pay them. This could result in your debt being passed on to a debt collection agency and a county court judgment (CCJ) being made against you. A CCJ could affect your credit rating.

Non-priority debts include:

• credit card debts
• some hire purchase agreements (HP)
• unsecured bank and payday loans (loans that are not secured against your property)
• water bills
• loans from friends and family.

If you have a CCJ made against you, you must keep to the terms of the court order. If you don’t, for example you fail to pay a certain amount each month, your creditor can go back to court and apply to enforce the debt.

Depending on the amount of the debt and your circumstances, your creditors could ask the court to send enforcement agents (previously known as bailiffs) to seize your non-essential goods, or make you bankrupt. If you are a homeowner, this could result in you losing your home.

For more information about priority and non-priority debts, contact a specialist debt adviser.

Use the Money Helper budget planner to help you organise your finances and prioritise your debts.