Priority and Non-Priority Debts Explained

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Key takeaways

Priority debts have the most serious consequences if not paid, such as losing your home or energy supply
Credit cards, loans and overdrafts are normally non-priority
Pay essential bills and priority debts before non-priority debts
Share what is left between non-priority creditors in proportion to what you owe
A free adviser can confirm how your own debts should be treated

When there is not enough money to pay everything, the order in which you pay matters. UK debt advisers divide debts into two groups: priority debts and non-priority debts. The labels have nothing to do with how big a debt is. They describe how serious the consequences are if you do not pay. Knowing the difference is one of the most useful things you can learn if you are struggling, because it tells you where limited money should go first.

What is a priority debt?

A priority debt is one where the creditor has strong powers to recover the money, or where non-payment could cost you your home, your energy supply or your liberty. These debts carry the biggest risk, so they should usually be dealt with before others.

Mortgage and secured loan arrears, because the lender could eventually take possession of your home
Rent arrears, which can lead to eviction through the courts
Council tax arrears, which can lead to a liability order and enforcement action
Gas, electricity and, in some cases, water arrears
Income tax, VAT and other money owed to HMRC
Court fines and magistrates' court penalties
Child maintenance arrears
TV licence, as non-payment is a criminal offence
Hire purchase and conditional sale agreements, where goods could be repossessed

What is a non-priority debt?

Non-priority debts are those where the creditor must usually go to court before they can take enforcement action, and where the consequences are less immediate. They are still real debts, and ignoring them can lead to a default, a county court judgment or collection activity, but they generally come after essential bills and priority debts.

Credit cards and store cards
Personal loans and payday loans
Overdrafts
Catalogue and mail-order accounts
Money owed to friends or family
Old utility or phone bills from a previous address
Buy now pay later balances and similar short-term credit

Why the order matters

Imagine you have £200 a month spare and owe £10,000 on credit cards plus three months of council tax arrears. Paying the credit card company in full would feel responsible, but the council has the power to apply for a liability order, send enforcement agents and, in some cases, take money directly from your wages or benefits. A card company cannot do any of that without first going through the courts. Putting the available money towards council tax first protects you from the more serious risks while you work out a longer-term plan.

Special cases

Debts that are not always clear-cut

Some debts do not fit neatly into either category. A secured loan on your home is a priority debt because your home is at risk, while an unsecured loan from the same lender is not. A car on hire purchase may be a priority if you need it to get to work and the lender could repossess it. A debt to a friend might carry no legal consequences but could be important to you for other reasons. If in doubt, ask an adviser.

Rules in Scotland

The principles are similar in Scotland, but the legal processes differ. Debt recovery uses decrees and diligence rather than county court judgments and enforcement by bailiffs. A Scottish debt adviser, such as Money Advice Scotland or a local Citizens Advice, can explain the details.

How to deal with priority debts

Make sure current payments, such as this month's rent or mortgage, are up to date before you worry about arrears.
Contact the creditor and explain your situation. Most have a hardship or arrears team.
Offer a realistic repayment based on a budget you have prepared.
Make the payments you agreed, and tell the creditor immediately if things change.
Ask for free help if the creditor refuses your offer or threatens action.

How to deal with non-priority debts

Once essentials and priority debts are covered, any remaining money should be shared between non-priority creditors fairly, in proportion to what you owe. Contact them in writing, send a copy of your budget and offer what you can afford, even if it is a small amount. Ask them to freeze interest and charges. If you are working with a debt adviser, they will do this with you using the standard financial statement.

Our guide to dealing with creditors covers how to write these letters and what to do if a creditor refuses your offer.

How creditors view the two types

It helps to understand why the law treats these debts differently. Landlords, councils, utility companies and HMRC have powers written into legislation, which is why they can act quickly: a landlord can ask the court for a possession order, a council can apply for a liability order, and HMRC can in some cases recover money directly from a bank account. A credit card company or catalogue lender has only the ordinary route open to any creditor, which is to send reminders, record a default, pass the account to a collection agency and, eventually, ask a court for judgment.

That does not make non-priority debts unimportant. A county court judgment stays on your credit file for six years, and once a creditor has a judgment they can use enforcement tools. The point of the distinction is to help you sequence payments sensibly, not to suggest you can ignore some debts for ever. If you are struggling, the best approach is to make sure the essentials are secure and then to work with creditors, ideally with a free adviser, on a plan for the rest.

Frequently asked questions

Is a credit card debt ever a priority debt?

Usually not. Credit cards are unsecured and non-priority. However, if a creditor has obtained a county court judgment and is enforcing it, you should speak to an adviser about how to handle it, as the risks are higher.

Is council tax a priority debt?

Yes. Councils have strong powers, including liability orders, enforcement agents and deductions from earnings or benefits, so council tax arrears are treated as a priority.

What if I am being chased harder for a non-priority debt?

Pressure from a creditor does not change the type of debt. A debt collector chasing a credit card does not make it a priority. If the contact is aggressive or distressing, you can complain, and the FCA has rules on how collectors must behave.

Should I pay anything towards non-priority debts if I have little money?

Even a small token payment shows good faith and helps stop some creditors escalating, but only after essentials and priority debts are covered. An adviser can help you decide what is sensible.

Sources and further reading

Dealing with debt — MoneyHelper
Debt and money — Citizens Advice
Council tax — GOV.UK

This page provides general information only. It is not personalised financial, legal or tax advice, and rules and figures can change. Your situation is unique — please check official sources such as GOV.UK and MoneyHelper, and speak to a qualified, FCA-authorised adviser before making important decisions about your money.

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MoneyBrink Editorial Team — Editorial team

The MoneyBrink Editorial Team researches, writes and reviews every guide on this site. We work from official UK sources such as GOV.UK, the Financial Conduct Authority, MoneyHelper and the Money and Pensions Service, explain things in plain English, and update articles when the rules change. We do not sell financial products and we do not give personal advice.

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