Priority vs Non-Priority Debts

The following debts are considered priority because of the severe consequences of non-payment:

• Rent arrears: Your landlord can start possession proceedings and ultimately evict you. This can also affect your ability to get council housing. Always contact your landlord immediately if you fall behind — most will agree a repayment plan.
• Mortgage arrears: Your lender can repossess your home. However, lenders must follow strict pre-action protocols and consider alternatives before seeking possession — contact your lender as soon as possible.
• Council tax: Councils can obtain liability orders, instruct bailiffs, apply for attachment of earnings, deduct from Universal Credit, or — in extreme cases — seek committal to prison for wilful refusal to pay.
• Gas and electricity: Suppliers can disconnect your supply if you owe money, though there are protections for vulnerable customers. Contact your supplier to agree a repayment plan or ask about a prepayment meter. Ofgem rules limit disconnection in practice.
• Child maintenance: The Child Maintenance Service has strong enforcement powers including deduction of earnings orders, removal of a passport, disqualification from driving, and committal to prison. Court-ordered maintenance can be enforced similarly.
• Magistrates' court fines: The court has powers to deduct from wages, seize goods, suspend a driving licence, and ultimately imprison for non-payment.
• Income tax and VAT (HMRC): HMRC has extensive recovery powers including enforcement action through the courts, attachment of earnings, and taking control of goods.
• TV licence: While it results in a criminal fine rather than a civil debt, persistent non-payment results in a fine that becomes a priority debt.

Non-priority debts are those where, although creditors can take action to recover what is owed, the consequences of non-payment are less immediately severe. Key non-priority debts include:

• Credit cards and store cards
• Personal loans and hire purchase (other than essential vehicles)
• Overdrafts
• Buy Now Pay Later agreements
• Water bills — water companies cannot legally disconnect domestic supplies for non-payment, making this effectively non-priority despite being a utility
• Benefits overpayments (in most cases)
• Money owed to friends and family

Creditors for non-priority debts can:

• Pursue you through the civil courts and obtain County Court Judgments (CCJs)
• Use bailiffs to enforce a CCJ
• Apply for a charging order on your property
• Apply for an attachment of earnings order

However, they cannot repossess your home (unless they have a charging order and go further), cut off your utilities, or have you imprisoned. This is why, in a resource-constrained situation, priority debts must be paid first.

When you have more debts than you can afford to pay in full each month, the following approach is recommended by debt advisers:

1. List all your debts — include the balance, creditor, and monthly payment for each.
2. Identify priority debts — separate the list into priority and non-priority debts using the categories above.
3. Calculate your disposable income — add up all income, subtract essential household expenditure (food, travel, utilities, childcare), and see what is left.
4. Pay priority debts first — ensure all priority creditors receive at least the minimum to avoid enforcement action, prioritising those with the most serious immediate consequences.
5. Make token payments to non-priority creditors — if you have nothing left after priority debts, you can offer non-priority creditors a token payment (even £1 per month) as a goodwill gesture while you seek debt advice. This does not stop them taking action but demonstrates good faith.
6. Seek free debt advice — a regulated debt adviser can help negotiate with creditors, set up payment plans, and explore formal solutions.

Do not be pressured into paying a non-priority creditor more than you can afford simply because they are more aggressive. A credit card company's threats to "take legal action" do not make their debt a priority — the consequences of a CCJ are still less severe than losing your home.

Once you have identified which debts to prioritise, contact all your creditors in writing to explain your situation. Most creditors — including local councils, energy suppliers, and mortgage lenders — have hardship policies and legal obligations to treat customers in financial difficulty fairly.

For priority creditors, contact them immediately and propose a realistic repayment plan. If you have had no contact, most will delay further enforcement action while a plan is being discussed. Councils and HMRC have legal duties to consider your vulnerability and financial circumstances.

For non-priority creditors, write to them explaining your situation and offering what you can afford. Request that interest and charges are frozen while you are in financial difficulty — this is required under FCA rules for regulated lenders (banks, credit card companies). Some creditors will accept a formal debt management plan arranged through a charity such as StepChange.

Keep copies of all correspondence. If a creditor responds to your payment offer by taking legal action without giving you time to respond, this can be evidence in any subsequent court proceedings that you acted in good faith.