For many Scots who are struggling with their debts and looking for advice, then they will hear terms such as ‘priority debts’.
But what are priority debts?
Essentially, priority debts are those debts that have serious consequences should you not pay them.
It’s also important to appreciate that they may not be the largest or have the most expensive rate of interest but by not paying them could lead to you creating a serious problem.
For instance, priority debts for people in Scotland will include:
- Council tax
- Court fines
- TV licence
- Gas and electricity bills
- Child maintenance
- Income tax and national insurance as well as VAT
- Rent, mortgage or a loan secured against your property
- Hire purchase agreements (if what you are buying is essential)
Non-payment of priority debts
When we discuss that the non-payment of priority debts could lead to serious consequences this means:
- Losing your home by not paying rent or mortgage payments
- Receiving a court summons
- Being visited by bailiffs
- Having lighting or heating cut-off because of unpaid bills
- Being made bankrupt through non-payment of bills
This then brings us to the issue of non-priority debts and while they have less serious consequences, they still play an important role.
For instance, non-priority debts will include:
- Bank or building society loans
- Personal loans
- Credit card, payday loans and store card debt
- Catalogue, in-store credit and home credit debts
- Money borrowed from family or friends
There’s no mention in either of these lists of water and sewerage bills and while they are considered to be non-priority they should really be included in the household’s essential outgoings.
That’s because the water company is providing the service that you will need to pay for.
Also, the non-payment of water and sewerage bills will mean the amount owed will continue to increase.
Someone in Scotland struggling with debts
So, how does someone in Scotland struggling with debts pay off their non-priority debts faster?
It’s important that you pay the minimum payment at least on all debts so you avoid falling into arrears.
So, if you can afford to pay more, then the money should be targeted to save on interest costs and you will become debt free more quickly.
This means you should really target the most expensive debt first.
The most expensive debt on your list will be the one with the highest rate of interest – it’s also important to check that you will not be charged a penalty or default charge by overpaying.
It’s important to pay what you can afford without breaking the terms of any credit agreement you may have.
Essentially, when you’ve cleared the most expensive debt, it’s time to target the next one and over pay this until it is cleared as well.
Important issues for people living in Scotland
However, one of the most important issues for people living in Scotland who are struggling with their debts is to get advice that will help them overcome their current financial situation.
It may be that they are in an emergency situation and may be going to court or face losing their home. It’s important to act as soon as possible.
It’s also important to appreciate that you are not alone and indebtedness is a growing problem affecting lots of people in Scotland.
One of the big issues is that many people are unsure about the best way they should pay off their debts and it will be time well spent speaking with a debt adviser who can offer helpful advice.
Indeed, Scotland’s Trust Deed have a team of experienced and friendly debt advisers available to offer impartial help and advice.
This means the experts will be useful in helping someone living in Scotland overcome their debts but you don’t have to follow what the debt advisers at Scotland’s Trust Deed discuss.
Scots who want help to repay their debts
So, for those Scots who want help to repay their debts, then the team at Scotland’s Trust Deed can help them with either a debt arrangement scheme, trust deed or even sequestration, which is another name for bankruptcy.
There are various other routes that the advisors can offer advice and help on such as a debt management plan and conducting an informal negotiation with creditors.
If you live in Scotland and are struggling to repay your debts, then it makes sense to speak with the advisers at Scotland’s Trust Deed as soon as possible.