Sort your debts into priority order

When money is tight, it is easy to pay whoever is chasing hardest, which is not always the most important debt. This guide shows you how to list your debts, sort them by seriousness and work out what you can afford to offer. It is general information; a free debt adviser can check your plan and contact creditors for you.

Step by step

1. List every debt in one place

   Write down every debt, including arrears on rent, council tax, energy and water, as well as credit cards, loans, overdrafts and buy now pay later agreements. For each, note the creditor, balance, usual payment and whether you are behind. Use statements and letters rather than memory.

2. Mark each debt as priority or non-priority

   Priority debts are those where non-payment can lead to losing your home, enforcement agents, energy supply action or other serious consequences. These typically include rent or mortgage, council tax, gas and electricity, court fines, child maintenance and HMRC. Most other consumer credit is non-priority.

3. Work out your available income

   Build a realistic budget covering essential living costs such as housing, food, energy, travel and phone. Subtract these from your monthly income. The amount left is what you can safely offer towards debts.

4. Offer payments to priority creditors first

   Contact each priority creditor, explain your situation and propose an affordable payment towards the arrears on top of the ongoing bill. Ask them to confirm any arrangement in writing. Keep notes of the date, the person you spoke to and what was agreed.

5. Share the rest fairly among other creditors

   Divide any remaining money among non-priority creditors in proportion to what you owe each one. Write to them with your budget, your offer and a request to freeze interest and charges if possible. If there is nothing left, tell them and ask for time while you get advice.

6. Get your plan checked

   Contact StepChange, National Debtline or Citizens Advice to check your plan. They can also tell you whether Breathing Space or a formal debt solution might help. Set a date to review the plan in a month.

Ready-to-use checklist

• All debts and arrears listed with balances
• Each debt labelled priority or non-priority
• Realistic monthly budget completed
• Available amount for debts calculated
• Priority creditors contacted with offers
• Non-priority creditors sent a pro rata offer
• All agreements recorded in writing
• Free debt advice booked or contacted

Practical tips

• Keep your budget as your evidence, because creditors are more likely to accept an offer backed by real figures.
• Never borrow more to pay a priority debt without getting advice first.
• Tell creditors if your circumstances include illness or other vulnerability, as firms should take this into account.

Common problems