Priority Debts: Which Debts to Pay First and Why
Not all debts are equal. Some creditors have powers to take action that could leave you homeless, without heat or light, or facing criminal proceedings. These are called priority debts. Knowing the difference between priority and non-priority debts is the most important first step in managing a debt crisis, it tells you where to put your money when there is not enough for everything.
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Priority debts, the most serious
These debts have the most serious consequences if left unpaid and should always be dealt with first:
- ✓Mortgage or secured loan arrears, your home can be repossessed
- ✓Rent arrears, you can be evicted
- ✓Council tax, bailiffs can be sent, and in extreme cases imprisonment for deliberate non-payment
- ✓Gas and electricity bills, supply can be disconnected (though energy companies must offer a prepayment meter first for domestic customers)
- ✓Water bills, water cannot be disconnected for domestic customers, but the water company can still pursue you through the courts
- ✓Magistrates court fines, bailiffs, driving licence removal, and ultimately prison for non-payment
- ✓TV licence, fines of up to £1,000 plus costs
- ✓Child maintenance (CSA/CMS arrears), deductions from earnings, removal of driving licence, passport seizure
- ✓Income tax, National Insurance, VAT (HMRC debts), winding up petitions for businesses, bailiff action, bankruptcy
- ✓Hire purchase on essential items, the goods can be repossessed
Non-priority debts
Non-priority debts have less severe enforcement consequences. Creditors can still take you to court and obtain a County Court Judgment (CCJ), but they cannot directly take your home or disconnect your utilities.
- ✓Credit card debts
- ✓Personal loans and overdrafts
- ✓Store cards and catalogue debts
- ✓Payday loans
- ✓Unsecured bank loans
- ✓Most buy-now-pay-later debts
- ✓Money owed to friends or family
- ✓Debts to non-essential utilities (mobile phone, broadband)
Mortgage and rent arrears
Falling behind on rent or a mortgage is the most urgent priority debt situation for most people.
- ✓Contact your lender or landlord immediately, do not wait for letters
- ✓Mortgage lenders must follow the Mortgage Arrears Pre-Action Protocol before starting possession proceedings, they must explore all alternatives first
- ✓Courts have wide discretion to adjourn or suspend possession orders if you can show you can pay current payments plus a contribution to arrears
- ✓For renters, local councils have a duty to assist if you are at risk of homelessness within 56 days
- ✓Support for Mortgage Interest (SMI), a government loan available to homeowners receiving certain benefits
Council tax arrears
Council tax has some of the most aggressive enforcement powers of any creditor:
Energy bill arrears
Gas and electricity companies have the right to disconnect supply for non-payment, but they must follow rules before doing so:
- ✓The supplier must first offer you a prepayment meter (PPM) as an alternative to disconnection
- ✓Disconnection is not allowed in winter (October to March) for domestic customers if there are vulnerable people in the home (elderly, disabled, children)
- ✓If you are being threatened with disconnection, contact Citizens Advice or your supplier's hardship fund immediately
- ✓Most energy companies have emergency credit on prepayment meters, ask your supplier what is available
- ✓Ofgem complaint process available if the supplier acts unreasonably
How to deal with priority debts
Get instant help right now
A Citizens Advice appointment can take weeks. Our free assistant is available 24/7 with no appointment, giving you clear, step-by-step answers about your exact situation, what to do next, and the deadlines that matter.
Need to take action? It can draft a ready-to-send formal letter for you (optional, from £4.99).
England, Scotland, Wales & Northern Ireland.
Frequently asked questions
A credit card company is threatening court action but I also have rent arrears, what do I do?
Prioritise your rent arrears. Credit card companies cannot evict you, your landlord can. Pay enough toward your rent to prevent eviction, then write to the credit card company explaining you are dealing with priority debts and will contact them once stable. A token payment of £1/month shows good faith and often prevents immediate court action.
Can council tax send bailiffs without warning?
Not without first getting a liability order from the magistrates court. This involves giving you notice. However, once a liability order is obtained, enforcement can move quickly. If you have received a liability order notice, contact the council immediately to set up a repayment plan before bailiffs are instructed.
Is water a priority debt?
Partially. Water companies cannot disconnect domestic supply, so the immediate risk is lower than gas or electricity. However, water companies can pursue unpaid bills through the courts and obtain a CCJ. Most debt advisers treat water as a priority debt because of the potential for court action and the essential nature of the service.
What is a token payment?
A token payment is a small nominal amount (often £1 per month) sent to a non-priority creditor to show you acknowledge the debt while unable to pay in full. It does not stop interest accruing or prevent a CCJ, but it demonstrates good faith and can sometimes persuade creditors to hold off on court action while you stabilise your finances.
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