Priority and non-priority debts: what to pay first
Priority debts are the ones where not paying can lead to losing your home, having your energy cut off, bailiffs or, in rare cases, prison. Deal with them first, even if your other debts are bigger or charge more interest.
The word “priority” is about consequences, not size. A £300 council tax arrear can be more urgent than £8,000 on credit cards, because the council can use enforcement agents and take money from your wages or benefits without a separate court case for each step. The card company, by contrast, has to take you to court first.
MoneyHelper, run by the Money and Pensions Service, splits debts into three groups: emergencies, priority debts and non-priority debts. Emergencies are things like court action, bailiff action, disconnection or eviction happening now. If that is you, get free advice today, before anything else.
Which debts are priority debts?
| Debt | What can happen if you do not pay |
|---|---|
| Rent arrears | Your landlord can take court action to evict you |
| Mortgage and loans secured on your home | The lender can go to court to repossess your home |
| Council tax | A liability order, then deductions from wages or benefits, or enforcement agents. In England, prison for up to 3 months is possible as a last resort if a court finds you have no good reason for not paying. Wales ended this in 2019 |
| Gas and electricity | Your supply can be cut off, or a prepayment meter installed |
| Magistrates’ court fines | Deductions from benefits or wages, enforcement agents, and prison as a last resort |
| Child maintenance | The Child Maintenance Service can take money from your earnings or bank account and, as a last resort, use bailiffs, take away a driving licence or passport, or apply for prison |
| TV licence | Watching or recording live TV without a licence can lead to a fine of up to £1,000 |
| Income tax, National Insurance and VAT | HMRC can take money from your wages or bank account, take and sell your belongings (England, Wales and NI), take you to court or make you bankrupt |
| Hire purchase on something you need, such as a car for work | The lender can take the goods back |
| Money owed to the DWP or HMRC, such as overpayments | Deductions from your benefits or wages |
Each of these has its own rules and stages, and you usually get several chances to sort things out before the worst happens. For more on the most common ones, see council tax arrears, rent arrears, and gas, electricity and water debt.
What are non-priority debts?
Most borrowing is non-priority: credit and store cards, personal loans, overdrafts, payday loans, catalogue and buy now pay later accounts, and money borrowed from friends or family.
Water bills are non-priority too, but for a different reason. The law does not allow a water company to disconnect a home that someone lives in as their only or main home for non-payment. It is still an essential bill, so keep paying your current water charges if you can.
Non-priority does not mean you can ignore it. The lender can add interest and charges, record a default on your credit file and, eventually, take you to court. If it gets a county court judgment and you do not keep to it, it can use bailiffs or ask for deductions from your wages. But none of that happens quickly or without warning, and lenders have to treat you fairly along the way.
Why pay priority debts first, even if others cost more?
Because the risk is different. A high interest rate costs you money. Losing your home or your energy supply costs you far more, and is much harder to undo.
It can feel wrong to pay less to the lenders chasing you hardest, but those lenders are the ones with the fewest powers. FCA rules say lenders must treat customers in financial difficulty with forbearance. One example the rules give is accepting no payments, reduced payments or token payments for a reasonable period from a customer who shows that paying their existing debts would mean not meeting priority debts or other essential living costs.
How do you deal with priority debts first?
- Work out a budget. List your income and essential spending, including your current rent or mortgage, council tax, energy and food. Our guide to making a budget when you are struggling with debt goes through it step by step, and MoneyHelper’s free bill prioritiser sorts bills into order for you.
- Pay the current charges first. Keeping up with this month’s rent, council tax and energy stops the arrears growing.
- Then offer something towards the arrears. Contact each priority creditor, explain your situation and offer a regular amount you can keep up. Keep a note of what is agreed.
- Share out what is left between non-priority debts. If there is little or nothing left, tell those lenders and ask them to accept a token payment and freeze interest while you get advice.
- Check you are not missing help. Council tax reduction, benefits you have not claimed, energy supplier hardship funds and emergency grants can all make a difference.
For example (hypothetical): Sam has £120 left each month after essentials. Sam is £400 behind on council tax, £300 behind on electricity, and owes £9,000 across three credit cards whose minimum payments come to £270. Paying the cards first would leave the council tax and electricity arrears growing. Instead, Sam agrees £60 a month with the council and £40 a month with the energy supplier, then offers the remaining £20 split between the three card lenders while getting free debt advice.
If creditors are pressing and you need time, a debt adviser in England or Wales can consider Breathing Space, which pauses most enforcement and freezes interest and charges on included debts for up to 60 days. It covers arrears of priority bills, but you still have to pay the charges that fall due during it.
Not sure which option fits? Answer a few questions and we can point you in the right direction. It takes about 3 minutes, and it is free and confidential.
If you use our checker, we may pass your details to a licensed insolvency practitioner or debt adviser.
How do debt solutions treat priority debts?
This is where the type of debt really matters, because some debts cannot be included in a formal solution at all. A debt management plan only covers non-priority unsecured debts, so priority debts are always paid separately alongside it.
| Debt | IVA | Debt relief order | Bankruptcy |
|---|---|---|---|
| Council tax arrears | Can be included | Can be included | Can be included |
| Gas and electricity arrears | Can be included | Can be included | Can be included |
| Rent arrears | Usually not, unless the landlord agrees. Pay them separately | Can be included, but the landlord can still take action to get the property back | Get advice about keeping your tenancy |
| Mortgage and secured loans | Not included. Keep paying the lender | Not included | Not cleared. The secured lender can still repossess |
| Income tax and National Insurance arrears | Can be included | Can be included | Can be included |
| Benefit or tax credit overpayments | Can be included | Can be included | Can be included, unless the debt arose from fraud |
| Social Fund budgeting and crisis loans | Cannot be included | Cannot be included | Not cleared |
| Magistrates’ court fines | Cannot be included | Cannot be included | Not cleared |
| Child maintenance arrears | Cannot be included | Cannot be included | May not be cleared |
| TV licence arrears | Cannot be included | Cannot be included | Get advice |
Even when a priority arrear is included, you must keep paying the ongoing bill. An IVA or DRO deals with what you owed at the start, not next month’s council tax or rent. For the full picture on IVAs, see what debts can and cannot go into an IVA, and for every option side by side, see debt solutions compared.
IVAs, DROs and Breathing Space are not available in Scotland, where council tax arrears are also collected differently. See debt solutions in Scotland.
What to do next
- Make a list of every debt and mark each one priority or non-priority.
- Pay your current housing, council tax and energy bills first, then contact each priority creditor about the arrears.
- Tell non-priority lenders what you can afford, even if it is a token amount.
- Get free, impartial advice from MoneyHelper, StepChange, Citizens Advice or National Debtline: see where to get free debt advice. For other problems, see our debt problems hub.
Common questions
Is a credit card ever a priority debt?
Not usually. A credit card is a non-priority debt because the lender has to go to court before it can enforce payment. If it gets a county court judgment and you do not keep to it, enforcement becomes more serious, so do not ignore court papers.
Is my water bill a priority?
MoneyHelper lists water as a non-priority debt, because a water company cannot cut off the supply to your home for non-payment. It is still an essential bill, so keep paying your current charges if you can.
Should I stop paying my credit cards to pay my rent?
If you cannot pay both, housing, council tax and energy come first. Tell your card lenders what is happening and offer what you can. Lenders must consider accepting reduced or token payments for a time if paying them would stop you meeting priority debts and essential costs.
Are benefit overpayments a priority?
Advisers put them in different places. MoneyHelper lists money owed to the DWP or HMRC as a priority, because it can be taken from benefits or wages without going to court. Citizens Advice lists benefit overpayments (apart from tax credits) as non-priority, because the DWP cannot evict you or cut off a supply. In practice, pay rent, council tax and energy first, then deal with the DWP straight away, and challenge any overpayment you think is wrong.
Related guides
- How to make a budget when you are struggling with debt A practical budget method for people in arrears, with a worked example and free tools.
- What debts can and cannot go into an IVA? Which debts an IVA covers, which it cannot, and the grey areas such as rent arrears, HMRC and joint debts.
- Breathing Space: pausing creditors while you get advice Up to 60 days of protection from creditors while you get advice, or longer in a mental health crisis.
- Council tax arrears: what happens and what to do How councils recover arrears in each part of the UK, and how council tax fits with your other debts.