Sanctions and client needs
Non-payment of a priority debt may result in the client losing access to an essential service, their home, or imprisonment.
An adviser decides on the priority of debt through two rules:
The sanction of the creditor is the action they can take against the client. The following are sanctions for different types of debt:
•mortgage or secured loan – repossession of client’s home;
•rent – eviction;
•council tax – money taken from wages or bank account, bankruptcy or debt secured against the client’s home, client’s assets taken from their home;
•child maintenance – client’s assets are taken from their home, money taken from wages, bank account or benefits received, imprisonment.
•criminal fine – client’s vehicle impounded, money taken from wages, bank account or benefits received, imprisonment;
•tax, VAT or national insurance – client’s assets taken from their home, money taken from client’s bank account, clients PAYE tax code adjusted to recover debt, bankruptcy;
•decree – client’s assets taken from their home, money taken from wages or bank account, or debts secured against client’s home;
•TV licence – client receives a criminal fine;
•gas or electricity – client faces services being disconnected, decree, money taken from benefits received;
•hire purchase – the client faces repossession of goods;
•telephone – client’s phone line is disconnected.
Advisers must take into account the needs of the client and whether the creditor sanctions will have an adverse effect on those needs. This could be because of the creditor’s importance to them (such as a debt to a family member) or because they believe the goods or services are essential (such as a telephone for a housebound client).