Priority debts vs non-priority debts
Quick answer: When you cannot pay everything, debts are not all equal.
When you cannot pay everything, debts are not all equal. Priority debts are the ones where the consequences of non-payment are most serious — losing your home, having essential services cut off, or being jailed. Pay these first, then deal with non-priority debts separately.
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Primary source: https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-your-debts/work-out-which-debts-to-deal-with-first/
Priority debts
Priority debts are debts where the creditor has special legal powers. They include: mortgage and secured loan arrears (the lender can repossess your home), rent arrears (your landlord can evict you), council tax arrears (the council can use bailiffs and ask for direct deductions), gas and electricity arrears (the supplier can disconnect or force you onto a prepayment meter), magistrates' court fines (non-payment can result in prison), income tax, National Insurance and VAT owed to HMRC, child maintenance, and TV licence arrears.
Hire purchase or conditional sale on essential goods (e.g. a car you need for work) can also be priority if the creditor can repossess.
Non-priority debts
Non-priority debts include credit cards, store cards, personal loans, overdrafts, catalogue debts, payday loans, money borrowed from family or friends, and benefits overpayments where there is no active recovery.
Creditors can charge interest, take you to court for a County Court Judgment (CCJ) and ultimately apply for enforcement — bailiffs, attachment of earnings or a charging order on your home. But they cannot evict you, cut your gas off, or send you to prison.
Working out a payment plan
Start by listing all your debts and marking which are priority. Then build a budget showing income and essential outgoings. The money left over goes first to clearing or controlling priority arrears.
What is left after that is split between non-priority creditors on a pro-rata basis — they should accept a reduced offer if you can show your budget. Free debt advisers can write to creditors on your behalf.
Common questions
- Is my mortgage always a priority debt?
- Mortgage arrears are priority because the lender can repossess. The monthly payment is part of essential outgoings in your budget; arrears need a specific repayment plan with the lender, normally negotiated alongside debt advice.
- Are buy-now-pay-later debts priority?
- No. BNPL providers (Klarna, Clearpay etc.) are non-priority. Missed payments can still be reported to credit reference agencies once new FCA rules are fully in force, and the debt can be sold to a collection agency.
- Can I be sent to prison for council tax debt?
- Only in very limited circumstances and only in England (not Scotland or Wales). The court has to find 'wilful refusal or culpable neglect'. In practice committal is rare; bailiffs, attachment of earnings and direct deductions from benefits are far more common.