Identifying Priority vs. Non-Priority Debts

When you are short of money, the natural instinct is often to pay the loudest or most aggressive creditor first. This is a dangerous mistake.

In UK debt advice, debts are categorised not by how much money you owe, or how angry the letters are, but by the consequences of not paying. This divides your liabilities into priority debts (which carry severe penalties like eviction, disconnection, or prison) and non-priority debts (where the consequences are purely financial or damage your credit score).

A priority debt is one where the creditor has extreme powers to recover the money or punish non-payment. If you fall behind on these, you must address them immediately.

The primary priority debts in the UK include:

• Rent or mortgage — failure to pay can lead directly to repossession, eviction, and homelessness.
• Council Tax — councils have rapid legal routes to enforce payment, including taking money directly from your wages (Attachment of Earnings) or sending bailiffs.
• Gas and electricity bills — suppliers can legally force you onto a prepayment meter or, in rare cases, disconnect your supply.
• Child maintenance — the Child Maintenance Service (CMS) can take money directly from your wages or bank accounts without a court order.
• Income Tax, VAT, or National Insurance — HMRC has sweeping powers to recover unpaid tax.
• Court fines — unpaid criminal court fines can ultimately lead to a prison sentence.

Non-priority debts are standard consumer borrowings. While they are still legally binding, the creditors cannot take immediate action against your home, liberty, or vital services without first taking you to court and obtaining a County Court Judgment (CCJ).

Examples of non-priority debts include:

• Credit cards and store cards
• Personal loans and payday loans
• Overdrafts
• Catalogue accounts
• Water bills (water companies in England and Wales are legally banned from disconnecting residential supplies due to debt)

If you have constructed your budget and have £50 of 'disposable' cash remaining at the end of the month, 100% of that cash should go toward paying off your priority arrears (such as paying an extra £50 to clear a council tax balance).

You should offer your non-priority creditors token payments (even as low as £1 a month) until your priority debts are completely clear. Under FCA guidelines, consumer lenders must accept these lower, token proposals if you show them an honest budget sheet.