Can’t pay all your debts? Which to pay first in England — and how Breathing Space freezes interest for 60 days

When there isn’t enough money for every bill, you pay first not whoever calls loudest but whoever can do you the most harm. In England debts are split into priority and non-priority. Priority debts can lead to eviction, disconnection, bailiffs or even prison. Non-priority debts are unpleasant, but they cannot cost you your home straight away. Here is the order, based on GOV.UK, Ofgem and Insolvency Service rules.

Which debts are priority debts?

Debts where non-payment threatens your home, your liberty or essential services: rent and mortgage (eviction or repossession through the courts); council tax; gas and electricity; the TV Licence; magistrates’ court fines; child maintenance through the Child Maintenance Service; Income Tax and VAT owed to HMRC; and hire purchase on a car you need to get to work. Credit cards, overdrafts, personal loans, buy now pay later, store cards, payday loans and money borrowed from friends are non-priority. Those creditors can go to court, but they do not come first.

In what order should you pay if money is short?

First, make a budget: income minus essentials (housing, food, travel to work, utilities). Second, from what is left, keep up current payments on priority debts and agree arrangements for any arrears. Third, share only what remains after that between non-priority creditors; if it is very little, you can offer them small token payments. Borrowing more to clear a priority debt is usually a bad idea: it just moves the problem, often at a higher interest rate.

What happens if you don’t pay council tax?

The process is quick and harsh. Miss a payment and the council sends a reminder giving you 7 days to pay; if you don’t, the whole year’s bill becomes due. A third missed payment brings a final notice. The council then gets a liability order from the magistrates’ court and adds its costs. After that it can take money from your wages or benefits (including Universal Credit and Pension Credit) or send enforcement agents. If a court decides you could pay and refused, you can be sent to prison for up to 3 months in England. What to do now: ask the council to spread payments over 12 months instead of 10 and check whether you qualify for Council Tax Reduction or discounts. More in our council tax guide.

What about energy and tax debts?

Under Ofgem rules you can ask your energy supplier for a payment plan, a payment break or reduction, a review of your payments, and access to hardship funds. If they won’t help, you can complain. HMRC offers payment plans based on what you can afford — usually around half of what is left after rent, food and bills. The TV Licence is different: watching without one is a criminal offence with a fine of up to £1,000. See our TV Licence guide.

How can you freeze interest and creditor calls for 60 days?

In England and Wales there is Breathing Space (the Debt Respite Scheme). It is set up not by a court but by a free debt adviser authorised by the FCA. For 60 days creditors cannot demand payment, contact you to collect, take court action or send bailiffs, and interest and charges are frozen. You must live in England or Wales, not have a DRO, IVA or be bankrupt, and not have had a standard Breathing Space in the last 12 months. You still have to keep paying ongoing bills during it — rent or mortgage, council tax, energy, water, taxes and insurance — or it can be cancelled. Court fines, child maintenance, student loans, Universal Credit advances and Social Fund loans are not covered. People receiving mental health crisis treatment can get a special version that lasts for the whole treatment plus 30 days.

Where can you get free debt help?

MoneyHelper (the government-backed service), National Debtline, StepChange and Citizens Advice all help for free. They will work out a budget, write to creditors, set up Breathing Space and tell you whether a Debt Relief Order fits — a DRO is now free, and people who once paid a £90 fee can get it back: here is how. Companies that charge for “debt management” do the same thing with your money. If a creditor has already gone to court, see our guide to money claims.