Working out whether a debt is a priority depends on what would happen to the client if they don’t pay off the debt.
The debt is a priority debt if non-payment would give the creditor the right to deprive the client of their home, liberty or essential goods and services. The adviser will need to take the client’s individual circumstances into account to work out whether goods and services are essential.
A debt is not a priority debt just because the creditor has prioritised it by deducting money from the client’s earnings or benefits to repay the debt without a court order. However, doing this clearly impacts on the client’s ability to maintain their essential expenditure and the available income they have to make repayments to other creditors.
In some cases, the client may not be able to make payments towards all their priority debts so they will need to work out which priorities to pay first. When helping them to decide this, it is particularly important to consider the client’s options to maximise their income and improve financial capability.
These are the ultimate penalties for non-payment of a priority debt:
- Mortgage arrears – eviction
- Rent arrears – eviction
- Council Tax arrears – imprisonment
- Unpaid fines – imprisonment
- Gas/electricity arrears – disconnection
- Income tax/VAT arrears – goods taken control of by enforcement agents (bailiffs) without a court order
- Hire purchase arrears – goods repossessed
- Child Support arrears – imprisonment.
The following resources can be used to assist advisers with Priority Creditors:
- Wherever possible, it is good practice for advisers to telephone Council Tax departments during the course of the initial debt advice interview while the client is present in order to obtain information about the client’s Council Tax account and the status of any arrears e.g. enforcement action. The below checklist provides a structure for the conversation and can be used to ensure that all necessary information is captured, any urgent issues are identified and addressed and to enable the adviser to advise the client on their options. There is a section at the end of the checklist for the adviser to make any notes required as a result of additional issues arising during the conversation which can then be transposed to the case record. A copy of the checklist should be placed on the case file. Council Tax Information Checklist
- This is a list of questions that can be asked and requests that can be made when having a telephone conversation with an Enforcement Agent. Different questions and requests in the list will be relevant in different situations and the client may be able to provide some answers and paperwork. Conversation with Enforcement Agent Form