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# Priority Debts, What to Pay First When You Can't Pay Everything
You're not daft for being here at 2am staring at bills. The trick now is to put them in the right order, not to magically pay everything at once.
1. Priority vs non-priority debts
Not all debts are equal. Some can take your home, cut off your gas, or put you in front of a magistrate. Others "only" wreck your credit.
Priority debts · the ones where the consequences are worst if you don't pay.
Non-priority debts · still serious, but they don't usually get you evicted, disconnected, or imprisoned as quickly.
You always deal with priority debts first, even if a credit card company is shouting louder. The credit card can wait. Your landlord and HMRC can't.
2. Priority debts, pay these first
These debts have the most severe consequences for non-payment. Some can result in losing your home, your liberty, or your ability to work.
| Debt | What happens if you don't pay |
|---|---|
| Rent or mortgage | Eviction (rent) or repossession (mortgage). You lose your home. |
| Council tax | Magistrates' court summons, liability order, bailiffs. In extreme cases of wilful refusal to pay: prison (up to 3 months). |
| Income tax / NI / VAT (HMRC) | Penalties, interest, enforcement agents, taking control of goods, bankruptcy petition. In cases of deliberate evasion: criminal prosecution. |
| Gas and electricity | Disconnection or forced switch to prepayment meter. Arrears loaded onto the meter. |
| Child maintenance (CMS) | Deductions from wages/bank account, removal of driving licence, removal of passport, and in extreme cases: prison. |
| Magistrates' court fines | Further enforcement, deductions from benefits, clamping/removal of vehicle, and if you have money and wilfully refuse: prison. |
| TV licence | Magistrates' court fine of up to £1,000 if you watch live TV or BBC iPlayer without a licence. |
| Secured loans (on your home) | Repossession, same as mortgage. |
| Hire purchase (if the goods are essential) | The finance company can repossess the vehicle or equipment. If your van is on HP, losing it means losing your ability to work. |
If you can only afford to pay some of your debts, these are the ones you pay first. The consequences of ignoring them are the most severe and the hardest to undo.
3. Non-priority debts, important, but second in line
These can wreck your credit, lead to CCJs and eventually bailiffs, but they don't usually get you evicted, disconnected, or imprisoned as fast.
| Debt | Typical consequence of non-payment |
|---|---|
| Credit cards and store cards | Default, CCJ, damage to credit score, eventually bailiffs |
| Personal loans and overdrafts | Default, CCJ, credit score damage |
| Trade credit (merchants/suppliers) | They stop your account, may pursue a CCJ |
| Catalogue and buy-now-pay-later | Default, CCJ, credit score damage |
| Loans from family and friends | Relationship damage (no legal enforcement unless formalised) |
| Water bills | Cannot be disconnected (it's illegal to cut off domestic water supply), but they can get a CCJ |
| Mobile phone and broadband | Service cut off, debt passed to collection agency, credit score damage |
These still matter, they can end up as CCJs and bailiffs (see our CCJ guide). But if you've got £200 and the choice is rent, council tax, and HMRC vs a credit card payment, you pay the priority debts first.
4. Why HMRC debts sit at the top
HMRC aren't like normal creditors. They have powers most others don't.
- They can add interest and penalties automatically · 5% at 30 days, another 5% at 6 months, another 5% at 12 months, plus daily interest at Bank of England base rate + 2.5%
- They can send enforcement agents (bailiffs) to take control of your goods under their own statutory powers · they don't need a court judgment first
- They can take money directly from your bank account (Direct Recovery of Debts) for debts over £1,000 if you've been given multiple chances to pay
- They can petition for your bankruptcy for debts over £5,000
- In cases of deliberate, dishonest evasion · they can pursue criminal prosecution
Never ignore HMRC letters. If you can't pay, call the Payment Support Service on 0300 200 3835 early. They'll work with you on a Time to Pay plan. They're much harder to deal with after you've ignored three letters and they've passed it to enforcement.
See our guide: Can't pay my tax bill: what to do.
5. Breathing Space, a 60-day legal pause
If everything is on top of you, there's a legal scheme called Breathing Space (formally the Debt Respite Scheme) in England and Wales.
What it gives you:
- 60 days where most enforcement action must stop
- Creditors can't contact you about included debts during this period
- Interest and charges are frozen on those debts for the full 60 days
- Bailiffs already chasing you must pause (with some exceptions)
What it doesn't cover:
- You still have to pay ongoing bills · current rent, current energy, current council tax
- It doesn't cover debts arising from fraud or fines from the courts
- It's a pause, not a write-off · after 60 days, you need a plan
How to get it:
- You can't apply yourself · you must go through an authorised debt adviser (StepChange, National Debtline, Citizens Advice, or a local debt advice agency)
- They assess your situation, confirm you're eligible, and register you
- Once registered, the protections kick in immediately
There's also a Mental Health Crisis Breathing Space · if you're receiving mental health crisis treatment, the protections last for the duration of your treatment plus 30 days. Your mental health professional or approved mental health practitioner can certify this.
The Breathing Space scheme was introduced under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020.
6. How to talk to creditors yourself
For non-priority debts, or even some priority ones once you've dealt with the immediate threats, you can write to creditors and ask them to:
- Accept reduced payments for a period, and
- Freeze interest and charges while you're getting back on your feet
What to include in your letter
- Your name, address, and account number
- A brief outline of your situation · "work has dropped", "illness", "tax arrears I'm dealing with first"
- A realistic payment offer · backed up with a simple income and outgoings summary if possible
- A clear ask: "Please accept £[X]/month for [X months] and freeze interest and charges while I get back on my feet"
What to expect
- They don't have to say yes · but many will, especially once they see you're treating priority debts properly and being honest
- If they agree, get it in writing · email confirmation at minimum
- If they refuse and you genuinely can't pay more, a debt adviser can negotiate on your behalf with more leverage
- Never offer to pay more than you can afford just to stop the phone calls · that creates a worse problem next month
7. The realistic plan for tonight
If you're reading this at 2am with a pile of letters, here's the order:
Step 1: Keep the roof on
Pay your rent or mortgage first. Losing your home makes everything else harder.
Step 2: Keep the lights and heating on
Pay gas and electric. Being disconnected or moved to prepayment is expensive and miserable.
Step 3: Pay council tax and HMRC
These have the strongest enforcement powers and the worst consequences for non-payment. If you can't pay in full, call them and set up a payment plan before the deadline.
Step 4: Protect your ability to work
If your van is on HP, keep those payments up, losing the van means losing your income, which makes everything else collapse. If tools or essential equipment are at risk, see our bailiffs guide.
Step 5: Offer token payments to non-priority debts
Even £1/month to each non-priority creditor shows willing and makes it harder for them to argue you're ignoring the debt. Write to each one explaining your situation.
Step 6: Get free help this week
Book a call or go online with StepChange, National Debtline, or Citizens Advice. Even if you feel embarrassed, they've seen much worse. Every day you leave it, the options narrow.
What to do next
- Write down every debt · who you owe, how much, and whether it's priority or non-priority
- Pay priority debts first · roof, energy, council tax, HMRC, child maintenance
- Call HMRC on 0300 200 3835 if you can't pay a tax bill · get a Time to Pay plan before enforcement starts
- Contact a free debt adviser · StepChange (0800 138 1111) or National Debtline (0808 808 4000) · this week
- Ask about Breathing Space if you need enforcement to stop while you get a plan together
Sources
- Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 · legislation.gov.uk/uksi/2020/1311
- Council Tax (Administration and Enforcement) Regulations 1992 · legislation.gov.uk/uksi/1992/613
- Taking Control of Goods Regulations 2013 · legislation.gov.uk/uksi/2013/1894
- Finance Act 2008, s.127 (HMRC enforcement) · legislation.gov.uk/ukpga/2008/9/section/127
- Finance (No. 2) Act 2015, s.51 (Direct Recovery of Debts by HMRC) · legislation.gov.uk/ukpga/2015/33/section/51
- Water Industry Act 1991, s.61 (prohibition on disconnecting domestic supply) · legislation.gov.uk/ukpga/1991/56/section/61
- Child Maintenance and Other Payments Act 2008 · legislation.gov.uk/ukpga/2008/6
- StepChange, Priority Debts Guide · stepchange.org
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