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HomeAdviceTypes of debt

Types of debt

If you’re struggling to pay your essential living costs and your debts, it's important to know which to pay first.

Some debts have more serious consequences if you don’t pay them. It's important to prioritise the payment of these debts. For example you could lose your home, go to prison or lose vital services. We call these priority debts.

Struggling to pay your debts?

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1800 937 435

Priority and non-priority debts

If you’re struggling to pay your debts, you need to sort which are the most important and concentrate on paying these first.

Examples of priority debts and what might happen if you don’t pay them include:

  • Mortgage – your home could be repossessed
  • Rent – you may be evicted from your home
  • Criminal fines – you could be sent to prison
  • TV Licence – you could get a fixed penalty fee or face prosecution
  • Tax – money can be taken straight from your bank, or goods taken from you by the Sheriff to sell
  • Child maintenance payments – you could get a court judgment followed by money taken straight from your wages
  • Electric or gas – you could get a pre-paid meter fitted, or your supply cut off as a last resort
  • Car hire purchase – you could lose the vehicle

If you don’t have enough money to pay all of your debts, you should make sure you pay your priority debts first. If you’re not sure what to pay first, contact us and we’ll help you work it out.

Action can still be taken against you on other debts and you could be taken to court if you don’t pay them. But they don’t have any of the extra legal powers that a priority lender has.

Examples of non-priority debts include:

  • Personal loans from a bank or credit union
  • Bank overdrafts
  • Credit cards
  • Store cards
  • Mail order catalogues

Secured and unsecured debts

If a debt is secured, the lender can take away property or goods from you if you don’t pay. Examples of secured debts are:

  • Mortgages – secured against your home
  • Secured loans – secured against your home
  • Hire purchase agreements – secured against the vehicle or other goods bought under this type of agreement

If you’ve fallen behind with payments to a secured debt, you must come to an agreement with the lender to deal with the arrears if you want to keep the property or goods.

This means in most cases, secured debts are treated as a priority.

What people say about us

“I have more confidence to speak with my lenders and I would recommend the service.”

- Siobhan, County Limerick

Foundation for Credit Counselling (trading as StepChange Debt Charity) is a company limited by guarantee registered in England and Wales (Company No: 2757055) and a charity registered in England and Wales (Registered Charity No: 1016630). Registered office: Wade House, Merrion Centre, Leeds, LS2 8NG, United Kingdom.
Authorised and regulated by the Financial Conduct Authority.

Open Monday to Friday, 9am – 5pm. Calls free from landlines and mobiles.

StepChange Debt Charity 2017