Step 4 Dealing with your non-priority debts

Extra help

In this section, we give information and advice on some non-priority debts that can be more difficult to deal with. They are:

  • charge cards;
  • payday loans;
  • catalogue debts;
  • personal debts to friends and family;
  • household water-rates arrears; and
  • non-priority business debts.

Charge cards

You may have a debt on a charge card such as American Express, where you have to pay the full balance off each month rather than in instalments as with a credit card. It can be more difficult to negotiate reduced offers of payment on charge cards as they are not ordinary credit agreements. You should still include them with your other non-priority debts. If your charge card company is threatening to take further action, contact us for advice.

Payday loans

A payday loan is a short-term loan, usually for a small amount of money. Many people use these loans to help them if they have run out of money before their next payday. The interest rates on these types of loans can be very high. Charges will also be added if you cannot pay the loan back on payday. This means that the debt can build up so you end up owing a lot more than you borrowed.

See our fact sheet:

Payday loans

A payday loan is a non-priority debt, but it can be difficult to deal with as you may have given what is called a ‘continuous payment authority’ to the loan company. This means that you have given the loan company permission to take money from your bank account. You may not realise you have given this permission, but you can get a continuous payment authority stopped by telling the bank or the payday loan company. Contact us for advice.

Catalogue debts

Extra advice:

liability of agents

If you act as an agent for the catalogue company and sell goods, or collect money for the company, you need to be careful. You should create a separate account for each of your customers. If you do not do this, then the catalogue company may hold you responsible for any payments missed by your customers.

As long as you set up separate accounts, you (as an agent) should not be held personally liable for your customers’ missed payments.

Mail order catalogues offer a way of buying goods by post and spreading the payments over a period of, typically, 20 to 40 weeks. Orders for goods and the collection of payments are sometimes undertaken by a local part-time agent; often this is a friend, relative or neighbour.

You should treat catalogue debts as a non-priority debt in the same way as your other non-priority debts. Goods ordered from a catalogue belong to you and cannot be taken back if you do not pay. If you have a dispute with the company or an agent about how much you owe, contact us for advice.

Personal debts to friends and family

You may owe money to friends and family. You should usually treat these debts the same as ordinary non-priority debts and make offers of payment in the same way.

Dealing with your non-priority debts

You may be able to agree to make no payments until your circumstances improve, so you can pay off your other creditors faster. Sometimes, you may want to make higher payments on a personal debt because lending you the money has caused hardship to someone you know, or your relationship may suffer if you don’t. This can be difficult, as your other creditors may be unhappy if you are paying more on a personal debt than is strictly ‘fair’. You need to explain the reasons to your other creditors and point out, for example, that if you pay off the personal debt quickly, you will be able to pay more to everyone else.

Household water-rates debt

Important:

water rates with rent

Some landlords collect payment for water rates in with the rent. If your tenancy agreement includes the payment of water rates as part of your rent, water arrears can count as rent arrears and could lead to court action to repossess your home. So treat water rates arrears paid to your landlord as a priority payment. Agree an amount that you can afford to pay to the arrears with your landlord. Phone us for advice.

Include any water-rates arrears with your other non-priority creditors, but keep up with your ongoing bills so your debt does not get any bigger.

Non-priority business debts

If you do not need to continue to trade with a particular supplier or service provider, you could treat any debts you have with these companies as non-priority debts. However, you may need to take care as some business suppliers are more likely to take court action, or make you bankrupt. If you are not sure whether to treat a business debt as a priority or a non-priority debt, contact us for advice.