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Types Of Creditors

What can happen....

Different creditors are allowed different ways of recovering their money in law, which should be taken into consideration when you schedule your payments to creditors.

Priority Creditors

These debts should be tackled first before dealing with secondary debts. Whilst all debts are important some are more important than others. The law gives different creditors different ways of recovering their money. If you don't act quickly some creditors could:

  • Take possession of your business premises, home or other premises
  • Cut off supply of gas, electricity or water to your business or home
  • Instruct bailiffs to remove equipment, vehicles, furniture or other goods from your business or home
  • Ask the magistrates to send you to prison.

The debts where these things could happen if you delay too long are;

 
Debt Possible action
Mortgage arrears Repossession / eviction
Second Mortgage arrears Repossession / eviction
Secured Loans Repossession / eviction
Income tax, National Insurance Distraint (Bailiff action) / bankruptcy
Council Tax / Community Charge Distraint (Bailiff action) / Imprisonment
TV Licence Fine / Distraint (Bailiff action) / Imprisonment
Water Rates Disconnection
Gas / Electricity Disconnection
Unpaid Court fines Distraint (Bailiff action) / Imprisonment
Maintenance Arrears Distraint (Bailiff action) / Imprisonment
Hire Purchase arrears (Essential Items) Repossession of the HP goods


Secondary creditors

These have less power to recover debts, but should not be ignored. These include: -

  • Unsecured loans
  • Credit Cards
  • Unnecessary hire purchase agreements
  • Store cards
  • Catalogue and mail order
  • Mobile phone (disconnected)
  • Repossessed house or car loans
 
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Did You Know

  • According to a recent statement from the Citizens Advice Bureau, it could take 77 years on average for people asking for help with debt to get back into the black.


    Britain's personal debt is increasing by £1 million every four minutes.