How to Prioritise Your Debts
If you're struggling with multiple debts, it can be difficult to know which payments should be dealt with first.
Prioritising your debts means identifying which debts could have the most serious consequences if they are not paid. This can help you protect your home, maintain essential services and reduce the risk of enforcement action.
If you cannot afford to pay all your debts in full, focusing on the most important debts first can help you make the best use of the money available.
Why Is It Important To Prioritise Debts?
When money is tight, it may not be possible to pay every bill and debt immediately.
Prioritising your debts can help you:
- Protect your home.
- Maintain gas, electricity and water services.
- Avoid legal action where possible.
- Reduce financial stress.
- Create a realistic repayment plan.
- Focus on the most urgent issues first.
Not all debts carry the same consequences, which is why understanding the difference between priority and non-priority debts is important.
Step 1: Identify Your Priority Debts
Priority debts are debts that can have serious consequences if they are not paid.
Common priority debts include:
- Rent arrears.
- Mortgage arrears.
- Council Tax arrears.
- Gas and electricity arrears.
- Court fines.
- Child maintenance arrears.
- Certain benefit overpayments.
- Income Tax and National Insurance debts.
If you are behind with any of these debts, they should usually be dealt with before non-priority debts.
Step 2: Identify Your Non-Priority Debts
Non-priority debts generally include:
- Credit cards.
- Store cards.
- Personal loans.
- Payday loans.
- Overdrafts.
- Catalogue debts.
- Buy Now, Pay Later agreements.
While these debts remain important, they typically have less immediate consequences than priority debts.
Step 3: Create A Household Budget
A budget helps you understand:
- How much income you receive.
- Your essential household expenses.
- What money is available for debt repayments.
Include:
- Income
- Wages and salary.
- Benefits.
- Pensions.
- Maintenance payments.
- Any other regular income.
- Essential Spending
- Rent or mortgage.
- Council Tax.
- Utilities.
- Food and groceries.
- Travel costs.
- Insurance.
A clear budget can help identify what you can realistically afford.
Step 4: Pay Essential Household Costs First
Before making debt repayments, make sure you have enough money to cover essential living costs such as:
- Housing costs.
- Utility bills.
- Food.
- Travel required for work or education.
- Essential childcare costs.
These expenses support your day-to-day wellbeing and should normally take priority over unsecured borrowing.
Step 5: Deal With Priority Debts
Once essential living costs are covered, focus on any priority debts.
Consider:
- Contacting the organisation you owe.
- Explaining your circumstances.
- Offering affordable payments.
- Asking about support arrangements.
Many organisations are willing to discuss payment plans if you engage with them early.
Step 6: Review Non-Priority Debts
After dealing with priority debts, consider what money remains available for non-priority creditors.
If you cannot afford the full contractual payments:
- Contact your creditors.
- Explain your circumstances.
- Offer an affordable amount based on your budget.
- Seek debt advice if needed.
Ignoring creditors can make debts more difficult to manage.
What If I Can't Afford All My Debts?
If you cannot afford all your debt repayments:
Don't Panic
Many people experience financial difficulties and support is available.
Seek Advice Early
The sooner you seek advice, the more options are likely to be available.
Explore Debt Solutions
Depending on your circumstances, options may include:
- Breathing Space.
- Debt Management Plans (DMPs).
- Debt Relief Orders (DROs).
- Individual Voluntary Arrangements (IVAs).
- Bankruptcy.
A debt advisor can help you understand which solutions may be suitable.
Warning Signs That Your Debts Need Reviewing
You may need help if you are:
- Missing payments regularly.
- Borrowing to pay other debts.
- Using credit for everyday essentials.
- Falling behind with priority debts.
- Receiving letters from creditors or bailiffs.
- Constantly relying on an overdraft.
These can all be signs that your current financial commitments are becoming difficult to manage.
Common Mistakes When Prioritising Debts
Paying Credit Cards Before Rent
Housing costs should usually be prioritised over unsecured borrowing.
Ignoring Council Tax Arrears
Council Tax is a priority debt and can lead to enforcement action.
Borrowing More To Keep Up With Payments
This can increase financial pressure and make debt problems worse.
Ignoring Creditors
Many creditors are more willing to help if you contact them early.
Tips For Managing Debt Effectively
✅ Open and read all letters about your debts
✅ Keep records of agreements and payments
✅ Create and regularly review your budget
✅ Prioritise essential household costs
✅ Focus on priority debts first
✅ Seek advice before problems become more serious
✅ Keep records of agreements and payments
✅ Create and regularly review your budget
✅ Prioritise essential household costs
✅ Focus on priority debts first
✅ Seek advice before problems become more serious
Need Help?
Our advisors can help you:
- Identify priority and non-priority debts.
- Create a realistic household budget.
- Negotiate affordable repayment arrangements.
- Explore debt solutions.
- Improve your financial wellbeing.
Contact our team for free, confidential advice and support.