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Step 5 - Prioritising your Debts

Some debts are more important than others. Debts are usually classified as priority or non-priority

The importance of the debt is not decided on the amount owed, but instead, the priority is based on the legal remedies that the creditor can enforce to recover the debt. The methods of enforcement used will depend on the type of debt owed.

Priority debts

A priority debt is generally defined as a debt where non-payment could lead to the eventual loss of your liberty, your home, your essential services (fuel supply), and in some circumstances your essential goods.

Note that if you are not currently in arrears with your priority creditors, you should ensure that you keep up the payments before dealing with any arrears that you may have with your non-priority creditors.

Non-priority debts

A non-priority debt is any other debt where non-payment could not lead to the loss of your liberty, home or essential goods or services.

If a debt is not a priority, this does not mean that you should ignore it, the creditor can still take legal action to recover their money - it's just that your priority debts have first call on available income.

Examples of priority debts

  • Mortgage arrears - are priority debts because non-payment could lead to the lender repossessing the property, evicting you from the property.

  • Secured Loan arrears - are priority debts because, just like a mortgage, non-payment of any loans that have been secured against your home, could lead to the lender seeking repossession of the property and evicting you.

  • Rent arrears - are priority debts because non-payment could lead to possession action being taken by your landlord and evicting you.

  • Council Tax - is a priority debt because non-payment could allow the Local Authority to use bailiffs to seize your property and could ultimately lead to imprisonment.

  • Fines and maintenance payment arrears - are priority debts because non-payment of any unpaid fines, maintenance arrears or child support arrears, could lead to a 'distress warrant' being issued could allow bailiffs to seize your property and could ultimately lead to imprisonment (if a committal order is issued).

  • Gas and Electricity arrears - are priority debts because non-payment could lead to the supplier disconnecting the gas or electricity supply to your property. As the water supply cannot be disconnected, any Water Payment arrears you may owe are not considered to be priority debts.

  • Tax and National Insurance arrears - are priority debts as non-payment of Income Tax, VAT or National Insurance Contributions could lead to court action being taken against you and ultimately lead to imprisonment.


In certain circumstances, Hire Purchase (HP) and conditional sale agreements can also be considered as a priority debt. However, this will only be accepted as a priority if less than a third of the total price has been paid, or if the agreement was for essential goods.


Examples of non-priority debts

  • Bank overdrafts


  • Unsecured personal loans


  • Credit card debts


  • Store card debts


  • Social Fund loans


  • Parking penalties


  • Benefit overpayments


In most circumstances, Hire Purchase (HP) or conditional sale agreements will be considered as non-priority debts. However, if less than a third of the total price has been paid, or the agreement was for essential goods, then they may be considered as priority debts.


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