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HomeTypes 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.

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 the MABS helpline now on 0761 07 2000. They're open Monday to Friday from 9am to 8pm.

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.

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StepChange Debt Charity 2021