Step 3 Dealing with your priority debts

​Business equipment leases

As with hire purchase, equipment leases may be a priority or a non-priority debt. Most of your rights are set out in the terms and conditions of your agreement. They will help you decide whether to treat the lease as a priority or a non-priority debt.

Check your agreement very carefully to see whether you have the right to keep the equipment at the end of the lease. Some leases also state that you have to pay for the whole lease, whether you keep the equipment or not. Check whether the debt will be reduced if you return the equipment.

Your agreement should also tell you what the lease company needs to do to get their equipment back if you do not pay.

If you do have the right to keep the equipment, or if the equipment is essential to keep your business running, any arrears should be treated as a priority debt. Use Your budget to make an offer of payment you can afford.
 

Warning:

selling your equipment

It can be a criminal offence to sell leased equipment without first getting the leasing company's permission. Contact us for advice.

If the equipment is not essential to running your business, you can treat it as a non-priority debt. Contact us for advice.

 

Dealing with your non-priority debts

Major suppliers

If you cannot get supplies from any other source, you may have to treat a trade supplier as a priority creditor. If you can use another supplier, you may be able to treat a supplier as a non-priority debt.

However, if you owe suppliers £5,000 or more they may threaten to make you bankrupt. If you are not sure how to treat your supplier debt, contact us for advice.