How to Prioritise Your Debts

If you have several debts, it can feel overwhelming trying to work out where to start. The key is understanding that not all debts are equal - the consequences of failing to pay certain debts can be significantly more severe than others.

To manage your debts effectively, you should categorise them into three groups:

• Debt emergencies - situations requiring immediate action
• Priority debts - debts with serious consequences if unpaid
• Non-priority debts - debts with less severe consequences

By understanding these categories, you can make informed decisions about which debts to tackle first and protect yourself from the most serious consequences.

Some situations require immediate action. These are debt emergencies that could result in serious consequences within days or even hours.

You may be facing a debt emergency if:

• You have a court hearing scheduled
• Bailiffs have contacted you or are due to visit
• Your gas or electricity is about to be disconnected
• You are facing eviction for rent or mortgage arrears

What to do:

• Contact Debt Free Advice immediately on 0800 808 5700
• If you have a court hearing, always attend - this is your chance to explain your situation
• If your hearing is within 24 hours, contact Shelter or Citizens Advice for emergency help
• Never ignore court letters or bailiff notices

Priority debts are those that carry the most serious consequences if you don't pay them. They're not necessarily the biggest debts or the ones with the highest interest rates.

Priority debts include:

• Court fines
• Council Tax
• TV Licence
• Child maintenance
• Gas and electricity bills
• Income Tax, National Insurance, and VAT
• Mortgage, rent, and secured loans
• Hire purchase agreements (for essential items like your car)
• Overpayments of benefits or tax credits

These debts are priorities because the consequences of not paying them can affect your home, your freedom, or essential services.

The consequences of not paying priority debts can be severe and life-changing.

If you don't pay priority debts, you could face:

• Bailiff visits - bailiffs can take your belongings to sell
• Court summons - you may have to go to court
• Disconnection - your gas or electricity could be cut off
• Imprisonment - for some debts like council tax or court fines
• Bankruptcy - creditors may make you bankrupt
• Losing your home - if you don't pay your mortgage or rent

This is why it's essential to deal with priority debts before focusing on other debts, even if your other debts are larger or have higher interest rates.

Non-priority debts carry less serious consequences, though creditors may still take action against you. They cannot send you to prison or take your home (unless they get a court order and you own your home).

Non-priority debts include:

• Overdrafts
• Personal loans
• Bank and building society loans
• Money borrowed from friends or family
• Credit cards and store cards
• Payday loans
• Catalogue debts
• Home credit (doorstep loans)
• In-store credit agreements

Important: Water and sewerage bills are technically non-priority debts, but you should still treat them as essential household expenses. Your water cannot be disconnected, but you could face court action.

Once you've addressed your priority debts, you can focus on clearing your non-priority debts efficiently.

Key strategies:

• Always pay the minimum on all debts to avoid falling further behind
• Target the highest interest rate first - this saves you the most money overall
• Check for penalty charges before making overpayments
• Pay as much as you can afford without breaking your other credit agreements
• Move to the next debt once the first is cleared

The avalanche method:

1. List all your non-priority debts by interest rate (highest first)
2. Pay minimums on all debts
3. Put any extra money towards the highest interest debt
4. Once cleared, move that payment to the next highest
5. Repeat until all debts are cleared

Nearly half of people in debt told us they aren't sure about the best way to pay off their debts. You don't have to figure it out alone.

Benefits of getting advice:

• Understand which debts to prioritise
• Learn about debt solutions that could help
• Reduce stress and feel more in control
• Stop debts from spiralling further

Don't delay - people who put off getting help often find their credit cards maxed out, are refused further lending, and watch their situation spiral.

Contact us today:

• Free helpline: 0800 808 5700
• Open 7 days a week, 8am to 8pm
• Online, telephone, or face-to-face advice available
• All advice is free, confidential, and impartial