When money is tight, it’s natural to feel unsure about which bills to pay first. Not all debts have the same consequences if you miss payments, so knowing the difference between priority vs non-priority debt is essential.
In this guide, we’ll explain the key terms, outline the types of debt UK households commonly face, and help you understand what bills matter most so you can take action in the right order. We’ll also share steps you can take to avoid serious consequences.
Understanding priority debts
Priority debts are the ones that can cause the most serious problems if you don’t pay them. They don’t always have the highest interest rate, but they do have the most severe consequences for non-payment.
If you fall behind with a priority debt, you could:
- Lose your home through eviction or repossession
- Have essential services like gas or electricity cut off
- Face court action, enforcement visits, or in rare cases, imprisonment.
Examples of priority debts
There are a number of priority debts which can cause serious issues if left unpaid:
- Mortgage or rent arrears
Missing payments could mean losing your home. For mortgages, lenders can begin repossession proceedings. For rent, landlords can start eviction.
- Council tax arrears
Councils can take you to court, apply for a liability order, and use enforcement agents to recover the money.
- Gas and electricity bills
Suppliers can apply to fit a prepayment meter or cut off your supply.
- TV licence
It’s a legal requirement to have one if you watch live TV or use BBC iPlayer. Not paying can lead to a fine from the magistrate’s court.
- Court fines
Non-payment can lead to enforcement action or prison in extreme cases.
- Child maintenance arrears
The Child Maintenance Service can take money from your wages or bank account without going to court.
- Overpaid tax credits
If you don’t pay, HM Revenue and Customs (HMRC) can use bailiffs or take money from your wages, benefits or tax credits.
- Hire purchase or conditional sale
The creditor may be able to repossess the goods if you don’t keep up with payments.
- Unpaid income tax, VAT or National Insurance
HMRC can take money from your wages or use bailiffs to take your property.
Understanding non-priority debts
Non-priority debts are still important, but the short-term consequences are usually less severe. Missing payments can still affect your credit file, lead to extra charges, and eventually result in legal action, but you’re not immediately at risk of losing your home or essential services.
Examples of non-priority debts
These debts are often called unsecured debts because they’re not tied to an asset like your home. They include:
- Credit cards
- Unsecured loans
- Payday loans
- Store cards and catalogues
- Overdrafts
- Overpayment of benefits (except tax credits)
- Unpaid parking tickets
- Unpaid water bills – water supply can’t be cut off
- Money owed to friends and family.
Even though non-priority debts come after urgent bills, you should still aim to make at least small payments towards them if possible. Ignoring them completely can:
- Damage your credit score
- Increase the total owed through interest and charges
- Lead to your creditor taking enforcement and court action.
How to work out what bills matter most
When money is short, paying priority debts first can prevent life-changing consequences. If you can’t cover all your bills, the order you pay them in can mean the difference between staying in your home and facing eviction.
If you’re unsure whether a debt is priority or non-priority, ask yourself:
- Could I lose my home or essential services if I don’t pay this?
- Could I face legal action or enforcement visits?
- Is this a legal requirement, like paying a TV licence or certain court fines?
If the answer to any is yes, treat it as a priority debt.
Tips for managing debts
To manage multiple debts, it can help helpful to:
- List all your debts and label them as priority or non-priority – this makes it easier to see which need urgent action
- Prioritise rent or mortgage payments above all else
- Pay utility bills promptly
- Make arrangements early – contact creditors before you miss payments as they’re more likely to agree to reduced terms
- Keep written records – save letters, emails, and notes from phone calls with creditors
- Avoid taking on new borrowing to pay off priority debts
- Review your budget regularly – your ability to pay debts can change if your income or expenses shift.
- Speak to a debt adviser who may be able to advise on debt solutions available to you.
How debt solutions treat priority and non-priority debts
Different debt solutions handle these categories differently, so understanding how each one works is key to choosing the right approach.
A DMP is an informal agreement with your creditors to pay back non-priority debts in reduced monthly amounts. It only covers non-priority debts, such as credit cards, personal loans, store cards, and overdrafts. You’ll need to keep paying priority debts separately.
An IVA is a formal, legally binding agreement between you and your creditors, usually lasting five or six years. You make one affordable monthly payment and at the end of the IVA, any remaining eligible debt is written off. It covers most non-priority debts and some priority debts, such as council tax arrears or utility bill arrears from before the IVA started.
A DRO is designed for people with low income, few assets, and total debts under a set limit. It pauses your debt repayments for 12 months, after which the debts included in the DRO are written off if your situation hasn’t improved. It covers most priority and non-priority debts, including council tax arrears, utility arrears, and unsecured borrowing.
Bankruptcy is a formal insolvency procedure that can write off most debts, though it may involve selling valuable assets to repay creditors and is generally a last resort option. It typically lasts 12 months and covers almost all priority and non-priority debts.
What to do if you fall behind on priority debts
If you’re already in arrears with a priority debt, take action immediately:
- Contact your creditor or provider
Explain your situation and ask about payment plans or temporary help.
- Check benefit entitlement
You might qualify for Universal Credit, Housing Benefit, or other support.
- Seek expert help
A regulated debt adviser can explore all your options and help you create a realistic budget. Free debt advice is available from MoneyHelper or get in touch with MoneyPlus for expert support.
