UK Debt Prioritisation (2026/27): Priority vs Non-Priority + What to Pay First
UK debt prioritisation 2026/27: priority debts (mortgage, rent, council tax, gas/electric, child maintenance, court fines, TV licence, income tax + NI) - the ones that can take your home / utilities / liberty. Non-priority (credit cards, payday loans, overdrafts, personal loans). Standard Financial Statement (SFS), Breathing Space Scheme, free debt advice routes.
Priority debts - pay these FIRST
Severe consequences if not paid. Loss of home, utilities, liberty, or criminal record.
| Debt type | Worst case consequence | Action |
|---|---|---|
| Mortgage arrears | Repossession of home (3-6 months arrears typical trigger) | Contact lender immediately; payment holiday or term extension possible |
| Rent arrears | Eviction (typically 2-3 months arrears trigger formal proceedings) | Contact landlord; check housing benefit / UC housing element entitlement |
| Council Tax arrears | Liability Order, bailiffs, attachment of earnings, prison for non-payment in extreme cases | Contact council to agree payment plan; check CTR entitlement |
| Gas / electric arrears | Disconnection, forced installation of prepayment meter | Contact supplier; check Warm Home Discount + Cold Weather Payment entitlement |
| Income Tax + NI / Self Assessment | HMRC enforcement, attachment of earnings, asset seizure, bankruptcy petition for £5k+ | Time to Pay arrangement (12 months standard); engage early |
| TV licence | Criminal prosecution + fine up to £1,000 | Pay direct debit; check 75+ exemption + low-income discount |
| Court fines + CCJs | Bailiffs, attachment of earnings, prison for non-payment of magistrates' fines | Contact court for payment plan; civil CCJ negotiation |
| Child maintenance (CMS / DEO) | Direct deduction from earnings, driving licence suspension, prison | Contact CMS; variation if circumstances changed |
Non-priority debts - pay these SECOND
Lesser consequences. Credit score damage, eventual CCJ + bailiffs, but no liberty / housing / utility risk. Often negotiable.
- Credit cards
- Personal loans
- Overdrafts
- Store cards
- Buy Now Pay Later (Klarna, Clearpay, Laybuy etc)
- Payday loans / high-cost short-term credit
- Catalogue debts
- Debts to family / friends (unsecured)
- Money owed to dental / private medical providers
- Phone contracts (if not for service - just remaining device cost)
Action plan when struggling
- List ALL debts - priority + non-priority. Use SFS template to map income + essentials + debt.
- Get free advice IMMEDIATELY - StepChange, Citizens Advice, National Debtline. Free + non-judgmental.
- Consider Breathing Space - 60 days of legal protection while you sort options. Apply via FCA-authorised debt adviser.
- Pay priority debts on time - even reduced payments better than nothing.
- Negotiate non-priority debts - reduced payment plans, full + final settlements, or insolvency if unmanageable.
- Check benefit entitlements - UC, CTR, PIP, free school meals. Often unclaimed.
- Avoid making things worse - don\'t borrow new money to repay old debt without advice; payday loans + high-cost credit make things worse.
- Consider insolvency if needed - DRO (no fee since 6 April 2024, debts under £50k), IVA (formal arrangement), bankruptcy (last resort). All have life implications - get advice first.
Related guides
- UK Debt Relief Order 2026/27 - fee-free insolvency since April 2024 for debts under £50k.
- UK IVA vs Bankruptcy 2026/27 - formal insolvency options.
- UK Emergency Fund Target 2026/27 - prevention before crisis.
- UK Universal Credit + Working 2026/27 - income support check.
- UK Council Tax Reduction 2026/27 - priority debt mitigation.
Frequently asked questions
What's the difference between priority + non-priority debts?
PRIORITY debts have severe consequences if not paid: loss of home, utility cut-off, prison, criminal record, court bailiffs. NON-PRIORITY debts have lesser consequences: damage to credit score, eventual County Court Judgments + bailiffs, but no liberty / housing / utility risk. ALWAYS pay priority debts first - the consequences are irreversible or hard to reverse. Non-priority debts can often be negotiated to lower payments, partial settlement, or written off via insolvency. The priority/non-priority framework is the cornerstone of UK debt advice.
What's the Standard Financial Statement (SFS)?
A standardised income + expenditure form used by all UK creditors + debt advice agencies since 2017. SFS sets "trigger figures" for reasonable spending categories (food, utilities, transport, clothing, etc.) - creditors should accept these without challenging your budget. Using SFS strengthens your negotiating position with creditors because they cannot quibble about expenses being "too high". Available via StepChange, Citizens Advice, Money Advice Network. Always use SFS when negotiating with creditors.
What's the Breathing Space Scheme?
Introduced May 2021. Gives debtors 60 days legal protection from creditor action + interest while seeking debt advice. Apply via FCA-authorised debt advisers (StepChange, Citizens Advice, Christians Against Poverty, etc.). During Breathing Space: creditor cannot enforce debts, no interest accrues, no fees added, no contact from creditors. Mental Health Breathing Space provides longer protection (until mental health crisis treatment ends + 30 days). Important: NOT a "debt write-off" - debts still exist + still need addressing. Just buys time for advice + arrangement.
Should I prioritise high-interest debt or priority debt?
PRIORITY debt always wins over high-interest non-priority. Example: 30% APR credit card vs 6 months mortgage arrears. Even though the credit card is more expensive monetarily, the mortgage arrears risk losing your home - irreversible. Pay minimum on all debts to prevent default escalation, then direct surplus to the priority debt first, then high-interest non-priority. Common mistake: emotional payments toward "embarrassing" debts (family loans, doorstep loans) at the expense of council tax or rent.
Where do I get free debt advice?
Multiple free + reputable options: StepChange (stepchange.org, 0800 138 1111) - largest UK debt charity, full case management. Citizens Advice (citizensadvice.org.uk) - face-to-face + phone, generalist + specialist. National Debtline (nationaldebtline.org, 0808 808 4000) - Money Advice Trust funded, phone-based. Christians Against Poverty (CAP) (capuk.org) - faith-based but available to all. PayPlan (payplan.com) - free but partly creditor-funded. AVOID: commercial debt management companies charging fees; they're unnecessary because free advice is comprehensive + high-quality. Council adviser referrals also free.
How do I negotiate with non-priority creditors?
Three main approaches: (1) Reduced payment plan - offer affordable monthly amount based on SFS budget. Creditors usually accept if you can demonstrate income/expenditure. Interest sometimes frozen, sometimes not. (2) Full + Final settlement - lump sum offer to clear debt at discount (typically 30-70% of balance). Creditors more open if balance has been with debt collection agency for some time. (3) Insolvency route (DRO, IVA, bankruptcy) - if debts unmanageable. Always communicate in writing; record all calls. Don't ignore creditor letters - escalation to CCJ + bailiffs is much harder to reverse.
What if creditors threaten me?
Most creditor "threats" are bluster. Bailiffs cannot come for unsecured debts without a court order (CCJ). Doorstep collectors have no legal authority to enter your home. Phone harassment must stop on request under Section 40 Administration of Justice Act 1970. FCA-regulated lenders must comply with the Consumer Credit Sourcebook (CONC) including fair treatment of customers in financial difficulty. Aggressive collection tactics can be reported to FCA + Financial Ombudsman Service. Real risks: County Court Judgment, charging order against property, attachment of earnings (deduction from salary), bankruptcy petition for debts £5,000+.
Will debt problems affect my employment?
Limited. Most employers cannot fire you for personal debts unless your role requires financial probity (financial services, security clearance, fiduciary roles). However: (a) Bankruptcy can affect FCA-regulated roles - report immediately as required. (b) DRO has fewer employment implications. (c) IVA may affect specific roles (insolvency practitioners, some financial services). (d) Attachment of earnings orders are visible to employers. (e) CCJs may appear on credit checks if employer does them. For most workers: debt doesn't affect employment. For regulated roles: disclosure may be required + insolvency can be career-ending.