When household finances start to feel stretched, there is a very natural human instinct to deal with which debt or creditor is shouting the loudest, and unfortunately that is almost always the wrong order. The credit card company with the aggressive call centre will get paid before the council tax that has gone quiet, and six months later the person dealing with the consequences is wondering how on earth a missed council tax bill turned into a bailiff at the door whilst the credit card balance has barely moved.
With Centrica reporting that household energy debts owed to them alone have risen above one billion pounds, and Energy UK warning that more than two million households could struggle to pay their bills by December, this is a conversation worth having properly, because the order in which you pay your debts genuinely matters and most people are getting it backwards.
The Difference Between Priority and Non Priority Debts
In the eyes of the law and the practical world that follows from it, debts fall into two very different categories. Priority debts are the ones that carry serious consequences if you do not pay them, including losing your home, losing your liberty, having essential services disconnected, or having goods removed by enforcement officers. Non priority debts, by contrast, will affect your credit file and generate a great deal of paperwork, but the consequences are slower and less severe.
This distinction matters because if you only have so much money to go around, and increasingly that is the situation many households find themselves in, you need to be paying the priority debts first and worrying about the rest second.
Priority Debts: Pay These First
Mortgage and rent arrears sit at the very top because the consequence of non payment is losing your home, which makes everything else considerably harder to deal with. Council tax comes next and is genuinely one of the most underestimated debts in the country, because councils have powers that ordinary creditors simply do not have, including the ability to apply for a liability order in the magistrates court and then send bailiffs without going anywhere near a county court.
Energy and water bills are also priority because supply can be affected, although water companies have stricter rules about disconnection. Court fines, child maintenance and tax debts owed to HMRC complete the list, and all of them carry consequences that can include enforcement action, attachment of earnings or in the most serious cases, imprisonment.
Non Priority Debts: Pay These Second
Credit cards, store cards, personal loans, overdrafts, catalogues and money owed to friends or family all fall into the non priority category, and whilst they can absolutely cause stress and damage your credit file, they cannot take your home or send bailiffs to your door without first going through a county court process that gives you ample time to respond.
This is not permission to ignore them, because doing so will eventually catch up with you, but it does mean that if your priority bills are unpaid and your credit card is screaming, the credit card waits.
The Breathing Space Scheme You Probably Have Not Heard Of
If you are genuinely struggling, the Debt Respite Scheme, more commonly known as Breathing Space, can give you sixty days of legal protection from creditor action, including pausing interest, fees and enforcement. It is not a debt write off and it does not solve anything on its own, but it does buy you time to take proper advice and put a plan together without the phone ringing every fifteen minutes.
Registrations under this scheme have been at consistently high levels over the past two years, which tells you everything you need to know about how widespread the pressure has become.
What To Do If You Cannot Pay Everything
If your income simply does not cover your outgoings, the answer is not to choose which essential bill to skip, the answer is to get advice on the formal options that exist precisely for this situation. Depending on your circumstances, that could mean a Debt Management Plan, an Individual Voluntary Arrangement, a Debt Relief Order or in some cases bankruptcy, and the right answer depends entirely on your income, your assets and your overall debt picture.
Each option has different consequences, different costs and different timeframes, which is why getting proper guidance from someone who understands the full picture matters more than picking the option that sounds least frightening.
The Earlier You Look At This, The More Options You Have
The single biggest factor in how well someone comes through a difficult financial period is how early they take advice, and yet most people wait until the position is genuinely critical before picking up the phone. If you are juggling bills and feeling the squeeze, a confidential conversation costs nothing and gives you a clear picture of where you actually stand, what your real options are, and which debts genuinely need attention first.
If you need help, please get in touch for a no-obligation consultation.
Adcroft Hilton: Debt, Insolvency & Bankruptcy Specialists
Helping you make the right choice for your financial future.
