Non–priority debts action plan
Action plan
- Update your financial statement with the payments you’re making to your priority debts
- List your non-priority debts
- If you have any disposable income left, work out how it should be distributed between your non–priority creditors
- Write a letter to your non–priority creditors, outlining the reasons for your financial difficulties and your payment offer. Letter templates are available from the debt advice centre
- Send your letter, financial statement and payment schedule debts to each non–priority creditor
What’s the worst that could happen?
Here’s a guide to the penalties for the most common non-priority debts.
| Type of debt | Final sanction for non-payment |
|---|
| Credit cards | County Court Judgment |
| Personal loan (unsecured) | County Court Judgment |
| Bank loan / overdraft | County Court Judgment |
| Hire purchase * | Loss of goods |
| Credit sale | County Court Judgment |
| Catalogue ** | County Court Judgment |
| Pawnbroker | Keep pledge |
| Loan shark *** | Not legally enforceable unless licensed |
| Loan from family / friends *** | County Court Judgment |
Source: Credit Action
* If the threatened goods are an essential requirement, for example a washing machine or car needed for work, then the debt must be treated as a priority. If you have paid less than one third of the total owed under the hire purchase agreement, the creditor can repossess the goods without a court order.
** Catalogue debts may be difficult to enforce as it is not always standard practice to complete a formal credit agreement, and creditors should be asked to produce a copy of this if proceedings are threatened.
*** Individual circumstances may suggest some other debts be treated as priority, although not legally enforceable, e.g. money owed to family, friends or loan sharks.
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