Which debts should I pay first?
Short answer
Priority debts first — rent, mortgage, council tax, gas and electricity, child maintenance, court fines and tax. Non-payment there can cost you your home, your energy supply or your liberty. Credit cards, loans, overdrafts and buy now pay later come second however loudly they shout.
The single most useful decision in problem debt is the order of payment, and it is not decided by who chases hardest. It is decided by what each creditor can actually do to you.
Priority debts
- Rent arrears — possession proceedings and eventual eviction.
- Mortgage arrears — repossession, though lenders must follow pre-action protocols and consider alternatives first.
- Council tax — a liability order, then bailiffs, attachment of earnings, deductions from Universal Credit, and in extreme cases committal.
- Gas and electricity — disconnection, subject to protections for vulnerable customers.
- Child maintenance — deduction from earnings, passport removal, driving disqualification, committal.
- Magistrates' court fines — deductions from wages, seizure of goods, licence suspension, imprisonment.
- Income tax and VAT — HMRC has wide recovery powers including taking control of goods.
Non-priority debts — credit and store cards, personal loans, overdrafts, buy now pay later, most benefit overpayments, money owed to friends and family, and water bills — carry real consequences but slower and milder ones. Water is the surprise on that list: domestic supply cannot lawfully be disconnected for non-payment. Non-priority creditors can obtain a CCJ, then send enforcement agents, apply for a charging order, or seek an attachment of earnings. They cannot cut off your utilities or have you imprisoned.
Working through it
List every debt with its balance and monthly payment, split the list into priority and non-priority, then work out your disposable income — total income minus genuinely essential expenditure. Cover the priority debts first, starting with the ones whose consequences arrive soonest. If nothing is left, offer non-priority creditors a token payment, even £1 a month; it does not stop them acting but it demonstrates good faith and is useful evidence later.
Write to everyone. Councils, energy suppliers and mortgage lenders all have hardship policies and duties to treat customers in difficulty fairly, and FCA-regulated lenders are expected to freeze interest and charges where you are in genuine difficulty. Keep copies. And do not let volume of contact set your priorities — a credit card company threatening legal action is still a smaller problem than falling behind on rent. Free advice from StepChange, National Debtline or Citizens Advice will do the negotiating for you.
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