Which Debts Should You Pay Off First? (A UK Step by Step Guide for 2026)

Are you struggling to decide which debts to pay off first? With so many bills, loans, and credit cards to manage, it can be overwhelming to know where to start. 

In this step-by-step guide for 2026, we’ll show you how to prioritise your debts, make a clear plan, and take control of your finances. Whether you’re dealing with rent arrears, credit card balances, or loans, this guide will help you take practical action and reduce stress while protecting your home, bills, and peace of mind. 

Step 1: List All Your Debts

Before deciding which debts you should pay off first, you need a clear picture of everything you owe. This step is simple, but it is one of the most important parts of managing debt. 

How to Write Down All Your Debts

Start by listing every debt you have, even small ones. Do not leave anything out, as missed debts can cause problems later.

You can do this on paper, in a notebook, or using a simple spreadsheet. List debts such as:

• Credit cards 
• Personal loans 
• Overdrafts 
• Buy now pay later plans 
• Catalogue accounts 
• Council tax arrears 
• Utility bills 
• Rent or mortgage arrears 

The goal is to see all your debts in one place. 

What Details to Include

For each debt, write down the following information:

1. The name of the lender or company.
2. The total balance you owe.
3. The interest rate (if there is one).
4. The minimum payment.
5. The payment due date.
6. Any missed payments or arrears.

If you are unsure about a balance or interest rate, check recent statements or log in to your online account. 

Why Seeing Everything Clearly Is Important

When all your debts are written down, it becomes easier to:

• Spot which debts are urgent.
• See which debts are costing you the most in interest.
• Avoid missed payments and extra charges.
• Make better decisions about which debts to pay first.

Many people feel stressed because their debts feel out of control. Writing everything down often makes the situation feel more manageable and helps you move on to the next steps with confidence.

Need Help To Deal with Your Debt?

If you’re unsure which debt solution is right for you, fill out the online form below to get started. Once you submit the form, we’ll get back to you to help you find your options. 

We’re here to support you every step of the way. 

So, let’s get started…!  

 

Step 2: Check Which Debts Are a Priority in the UK

After listing all your debts, the next step is to check which debts are a priority in the UK. These are the debts that must be dealt with first because the consequences of not paying them are serious. 

What are Priority Debts?

Priority debts are debts where non-payment can lead to serious action. This may include losing your home, having services cut off, or facing court action.

In the UK, priority debts are not based on how much you owe, but on what can happen if you do not pay. 

Why Priority Debts Must Be Paid First

Priority debts should always come before credit cards or loans because:

• They can affect your home or essential services.
• They can lead to court action or fines.
• Ignoring them can make your situation much worse.

Even if a priority debt is smaller than other debts, it should still be dealt with first. 

What Can Happen If You Ignore Priority Debts

If priority debts are ignored, you could face:

• Eviction or repossession 
• Bailiff action 
• Extra charges and penalties 
• Court orders or legal action 
• Loss of gas or electricity supply 

This is why knowing which debts you should pay off first is so important. 

Priority Debts You Should Pay First

Below are the main priority debts in the UK and why they matter. 

• Rent or Mortgage Arrears: Falling behind on rent or mortgage payments can put your home at risk. Landlords and lenders can take legal action if arrears are not addressed promptly. Paying rent or mortgage arrears should usually be your top priority.
• Council Tax Arrears: Council tax is a priority debt because councils can take strong action to recover it. This may include court action, bailiffs, or wage or benefit deductions. Thus, council tax arrears should be addressed as soon as possible. 
• Gas and Electricity Bills: Gas and electricity are essential services. If you fall behind, your supplier may install a prepayment meter or, in rare cases, disconnect your supply. Hence, keeping up with energy bills helps protect your home and daily living needs. 
• Court Fines: Court fines are always a priority debt. If they are not paid, you could face extra penalties or enforcement action. Thus, these debts should never be ignored. 
• Child Maintenance: Child maintenance payments are a legal responsibility. Missing payments can lead to enforcement action, including deductions from income or benefits. Therefore, these payments should be treated as a top priority. 
• TV Licence Arrears: Not paying your TV licence can lead to prosecution and a fine.
  Any arrears should be addressed to avoid further legal action. 

Once you have identified your priority debts, the next step is to deal with urgent action debts. 

Step 3: Deal With Urgent Action Debts

Once you know which debts are a priority, the next step is to focus on urgent action debts. These are debts where delays can quickly lead to serious problems. 

Debts That Can Lead to Court Action

Some debts move to court much faster than others if they are not dealt with. These include:

• Rent or mortgage arrears 
• Council tax arrears 
• Court fines  
• Child maintenance 
• TV licence arrears 

If court action starts, extra costs are often added, and you may have less control over how the debt is handled. Acting early can sometimes prevent the case from reaching court. 

Debts That Can Affect Your Home or Freedom

Certain debts can put your home or personal freedom at risk if ignored.
Examples include:

• Rent or mortgage arrears, which can lead to eviction or repossession.
• Court fines, which can lead to enforcement action.
• Council tax arrears, which can result in bailiff action or deductions from income.

These debts should be dealt with before non-priority debts like credit cards or loans. 

When to Act Immediately

You should take action straight away if:

• You receive a court letter or notice.
• You are behind on rent or mortgage payments.
• Bailiffs are mentioned in letters.
• You have been given a deadline to pay.

At this stage, it is important not to ignore letters or phone calls. Contact the creditor, explain your situation, and make an offer you can afford.

Dealing with urgent action debts early can stop problems from getting worse and help you stay in control of your finances. 

Step 4: Look at Your Non-Priority Debts

After dealing with priority and urgent action debts, the next step is to look at your non-priority debts. These debts are still important, but they usually come after priority debts in the repayment order. 

What are Non-Priority Debts 

Non-priority debts are debts where the consequences of not paying are less severe than priority debts.
They do not usually put your home or essential services at immediate risk.

This does not mean they should be ignored. It simply means they are dealt with after priority debts are under control. 

Why These Usually Come After Priority Debts

Non-priority debts come later because:

• They do not usually lead to immediate court action.
• They cannot directly take your home.
• Payment plans are often easier to arrange.

Focusing on priority debts first helps protect your housing, bills, and legal position. Read our article under the title Which debts can be included in a DMP? To learn further about which debts can be included in a DMP in 2026.

Common Non-Priority Debts

Below are the most common non-priority debts in the UK. 

• Credit Cards: Credit card debts often have high interest rates, which can make balances grow quickly. However, they are usually classed as non-priority because missing payments does not immediately risk your home.
• Personal Loans: Personal loans are normally non-priority debts.If payments are missed, the lender may contact you or add charges, but serious action usually takes time. 
• Store Cards: Store cards work in a similar way to credit cards and often carry high interest rates. They should be managed carefully but usually come after priority debts. 
• Overdrafts: Bank overdrafts are non-priority debts, but fees and interest can build up fast.
  Keeping track of overdraft charges is important. 
• Buy Now Pay Later: Buy now pay later agreements are non-priority debts. If missed, interest or late fees may be added, and the account may be passed to a debt collector. 
• Catalogue Debts: Catalogue debts are also non-priority. They often come with high interest and can become hard to manage if ignored. 

Once you have listed your non-priority debts, the next step is deciding which of these debts to pay off first. 

Step 5: Decide Which Non-Priority Debts to Pay Off First

When it comes to non-priority debts, choosing the right repayment method can make a big difference. Below are the main debt payoff methods, explained clearly so you can decide which suits your situation best. 

1. The Debt Avalanche Method (High-Interest First)

The debt avalanche method focuses on paying off the debt with the highest interest rate first. You make minimum payments on all other debts and put any extra money towards the most expensive debt.

This method may suit you if:

• You want to reduce interest costs.
• You have high-interest credit cards or store cards.
• You are focused on saving money over time.

2. The Debt Snowball Method (Small Balances First)

The debt snowball method focuses on paying off the smallest debt first, regardless of interest. Once a small debt is cleared, you move to the next smallest balance.

This method may suit you if:

• You feel stressed by having many debts.
• You need quick wins to stay motivated.
• You want to reduce the number of accounts quickly.

3. The Debt Snowflake Method (Using Small Extra Payments)

The debt snowflake method uses small amounts of extra money to reduce debts. This could be spare change, cashback, or small savings from day-to-day spending.

This method may suit you if:

• You do not have much spare income.
• Your budget is very tight.
• You want to make progress without big payments.

4. The Highest Balance First Method

This method focuses on clearing the largest debt first. It can reduce the biggest burden, but it often takes longer to see results.

This method may suit you if:

• One large debt causes the most stress.
• Other debts are easy to manage.
• You prefer tackling the biggest problem first.

5. The Equal Payment Method

With this method, you split any extra money evenly across all debts. This keeps all balances reducing at the same time.

This method may suit you if:

• Your debts are similar in size.
• Interest rates are close.
• You prefer a balanced approach.

Which Debt Payoff Method Is Best for You?

There is no perfect method for everyone. The best approach is the one you can stick to long term.

• Choose avalanche if saving money matters most.
• Choose snowball if motivation is key.
• Choose snowflake if money is very tight.

Staying consistent is more important than the method itself. 

 

Step 6: Should You Pay Credit Cards or Loans First?

Many people struggle to decide whether they should pay off credit cards or loans first. The right choice depends on interest rates, terms, and how urgent each debt is. 

How Interest Rates Affect the Decision

Interest rates play a big role in deciding which debts you should pay off first.

• Credit cards usually have higher interest rates than personal loans.
• High interest means the balance grows faster if you only make minimum payments.

In most cases, paying off high-interest credit cards first can save you money over time. 

When Loans May Be More Urgent

Loans may need to come first if:

• You have missed payments and arrears are building.
• The loan is linked to an asset, such as a car.
• The lender is threatening court action.

Some loans also have fixed repayment terms, and missing payments can lead to faster action than with credit cards. 

When Credit Cards Should Come First

Credit cards should usually come first if:

• The interest rate is much higher than your loans.
• You are close to your credit limit and fees are adding up.
• The balance keeps increasing despite regular payments.

Clearing or reducing credit card balances can quickly lower interest charges and make debts easier to manage. 

In many cases, the best approach is to compare interest rates and urgency, then focus on the debt that is costing you the most or causing the most pressure. 

Step 7: What If You Can’t Pay All Your Debts?

If you cannot afford to pay all your debts, you are not alone. The most important thing is to take action early and deal with the situation in a clear and organised way. 

Why You Should Not Ignore Debts

Ignoring debts often makes the problem worse. When debts are left unpaid, you may face:

• Extra charges and interest.
• Letters and calls from creditors.
• Court action or enforcement.

Even if you cannot pay much, contacting creditors shows you are trying to deal with the situation and can help prevent serious action. 

How to Split Payments Fairly

If you cannot pay all your debts in full, a fair approach is to:

• Pay priority debts first.
• Share any remaining money between non-priority debts.

This is often done by offering pro-rata payments, where each creditor gets a fair share based on how much you owe them.

This approach helps show that you are treating creditors fairly and paying what you can afford. 

What to Do If Money Is Very Tight

If your income only covers essentials and priority debts:

• Focus on keeping a roof over your head and essential bills paid.
• Do not borrow more money to cover debts.
• Consider asking creditors for a temporary payment break.

If you are struggling, free debt advice in the UK can help you review your options and decide the best next step. 

Step 8: Talk to Creditors the Right Way

Speaking to creditors can feel stressful, but contacting them early is one of the best steps you can take. Clear and honest communication can often prevent problems from getting worse. 

When to Contact Creditors

You should contact creditors as soon as you know you will struggle to pay. This may be when:

• Your income has dropped.
• You have missed or are about to miss a payment. 
• Your bills have become unmanageable.

Getting in touch early shows that you are taking the situation seriously and want to find a solution. 

What to Say When You Cannot Pay

When speaking or writing to creditors:

• Explain your situation honestly.
• Tell them what you can afford, even if it is a small amount.
• Ask for their help rather than avoiding contact.

You do not need to share unnecessary personal details. Keep the conversation clear and focused on what you can realistically pay. 

Asking for Breathing Space or Reduced Payments

In the UK, you may be able to ask for:

• Reduced monthly payments.
• A temporary payment pause.
• Extra time to catch up on arrears.

You can also ask about the Breathing Space scheme, which may pause interest and enforcement for a short period while you get debt advice.

Talking to creditors the right way can reduce stress and help you stay in control of your debts. 

 

Step 9: Use a Budget to Stay on Track While Paying Your Debts

Creating a budget is one of the most effective ways to manage your debts and stay in control. A clear budget helps you see exactly where your money goes and where you can make adjustments. 

How to Create a Simple Budget

Start with these steps:

1. List all income – include wages, benefits, or any other regular money.  
2. List all essential expenses – rent or mortgage, bills, food, transport. 
3. List all debt payments – include minimum payments for both priority and non-priority debts. 
4. Calculate what’s left – any leftover money can be used to pay down debts faster. 

Keep your budget simple and update it regularly to reflect changes in income or expenses. 

Finding Money to Repay Debts Faster

Even small adjustments can make a difference. Consider:

• Putting any bonus, cashback, or tax refunds towards debt.
• Reducing non-essential spending like subscriptions or takeaways.
• Selling items you no longer need.
• Increase your income by taking a part-time job or freelance work.
• Learn a new skill that can boost your earnings or qualify you for higher-paying opportunities.

Extra payments, even small ones, can reduce interest and shorten the time it takes to clear debts. 

Cutting Costs Without Causing Stress

Budgeting does not mean giving up everything you enjoy. You can reduce costs without causing stress by:

• Comparing providers for energy, insurance, or broadband.
• Cooking at home instead of eating out.
• Using public transport or walking where possible.
• Setting aside a small “fun money” allowance.

By balancing cost-cutting with ways to increase your income, you can repay debts faster while still maintaining a reasonable lifestyle. 

Step 10: When to Get Debt Help in the UK

Sometimes managing debts on your own can become overwhelming. Knowing when and where to get help is crucial for staying in control and avoiding serious consequences. 

Signs You Need Professional Help

You should consider contacting a professional debt advisor if you:

• Struggle to make minimum payments on multiple debts.
• Receive frequent letters or calls from creditors.
• Are at risk of court action, eviction, or bailiff visits.
• Feel stressed, anxious, or unsure how to manage your finances.
• Cannot see a clear way to repay debts on your own.

Early intervention can prevent problems from escalating.

Where Can You Get Debt Help in the UK?

If you’re struggling with debt, it’s important to get reliable, independent advice before making any decisions. In the UK, there are several services that can help you understand your options and find a solution that works for your situation. 

Among them, at Debt Advisory Services, we provide expert guidance and practical resources to help you explore all the debt solutions available in the UK and take control of your finances. 

Here’s why you can trust us for debt help:

• Expert Support: Our advisors review your financial situation carefully and guide you through options like Debt Management Plans (DMPs), Debt Relief Orders (DROs), IVAs, or other solutions, helping you find the most suitable approach.
• Comprehensive Resources: Learn about each debt solution, including eligibility, benefits, potential drawbacks, and how it may affect your credit record, so you can make informed decisions.
• Honesty and Integrity: We provide clear, ethical, and transparent advice. From assessing your debts to recommending the right solution, we support you every step of the way. 

[Important Note: For additional independent guidance, you can also access free resources from MoneyHelper, the UK’s official platform for managing debt and finances.]

Take the first step toward financial relief. Fill out the form below to speak with a qualified advisor and find the right debt solution for your situation today! 

Find The Right Help For Your Situation

Why Early Advice Can Stop Problems Growing

Reaching out to MoneyHelper early can:

• Prevent extra charges and interest from building up.
• Stop creditors from taking further action.
• Give you a clear, practical plan to manage and reduce debt.
• Reduce stress and help you feel more in control.

Remember, asking for advice does not mean failure. It means you are taking control of your finances and protecting them. 

Step 11: Alternative Debt Options Try Out If Payments Are Not Working

Sometimes, it may be difficult to agree on a payment plan with your creditor or debt collection agency, particularly if the payments are financially overwhelming.

In such cases, you might want to explore potential debt solutions in the UK. There are several options available in the UK, each with its own eligibility criteria. Choosing the right option can help resolve your debt issues, but the wrong one may make your financial situation worse.

However, it is essential to seek professional advice before committing to any debt solution. A debt advisor can help you assess your situation and guide you in selecting the most appropriate option.

Some of The Key Debt Solutions Available in England, Northern Ireland, and Wales:

• Individual Voluntary Arrangement (IVA): A formal agreement where you make regular payments to creditors over 5 or 6 years. The remaining debt may be written off, but this solution has strict criteria.
• Debt Relief Order (DRO): Designed for individuals in severe financial distress, this option freezes interest and allows a year of no payments, potentially leading to debt resolution.
• Bankruptcy:  A formal legal process that can clear most debts if you are unable to repay them. Bankruptcy provides a financial reset, but it also has serious long-term consequences, including restrictions on your financial affairs and potential asset loss.

Debt Solutions Available in Scotland

1. Protected Trust Deed: A formal agreement to repay part of what you owe over four years. The remaining debt may be written off afterward. It is legally binding and affects your credit rating.
2. Debt Arrangement Scheme (DAS): A government-backed scheme allowing you to repay your debts through a Debt Payment Programme (DPP) based on what you can afford. Interest and charges could be frozen, and creditors can’t take legal action.
3. Sequestration (Scottish Bankruptcy): A formal insolvency process where most debts may be written off, but assets may be sold to repay creditors. It offers a fresh start but comes with serious consequences.
4. Minimal Asset Process (MAP): A simplified form of bankruptcy designed for individuals with low income and few assets. It allows eligible debts to be written off after six months, provided the individual fully cooperates with the process. However, in practice, the process may take longer depending on the complexity of the case. MAP also offers lower fees and reduced administrative burden compared to full bankruptcy.

Caution: These debt solutions have both advantages and drawbacks, so it’s important to carefully weigh your options before making a decision.

Furthermore, if you are unsure which debt solution suits your situation, speak to a professional debt advisor. Free, independent advice services like MoneyHelper can help you assess your finances and find the best option for you. 

Common Mistakes to Avoid When Paying Off Debts

Paying off debts can be challenging, and it’s easy to make mistakes that slow your progress or make the situation worse. Knowing what to avoid can help you stay on track. 

Paying Non-Priority Debts First: 

Focusing on non-priority debts like credit cards or store cards before paying priority debts can be risky.

Priority debts (such as rent, mortgage, council tax, or energy bills) should always be paid first because ignoring them can lead to serious consequences like court action or losing your home. 

Using More Credit to Clear Debt

Taking out new loans or using additional credit to pay off existing debts may seem like a solution, but it often makes things worse. High-interest rates and extra fees can increase your overall debt, leaving you in a cycle that is harder to escape. 

Ignoring Letters and Court Notices

Some people avoid dealing with debt by ignoring letters, emails, or calls from creditors.
This can lead to:

• Court action 
• Bailiff visits 
• Increased fees and interest 
• Loss of control over repayment 

Always open and respond to communication from creditors, even if you cannot pay the full amount. 

Additional Mistakes to Avoid

Other common mistakes include:

• Skipping minimum payments – even small payments prevent extra charges and show you are trying.
• Failing to track all debts – forgetting debts can lead to missed payments and additional costs.
• Not reviewing your budget regularly – circumstances change, and a static plan may not work long-term.
• Ignoring professional help – services like MoneyHelper can guide you safely through debt repayment.

Avoiding these mistakes will help you stay in control, reduce stress, and pay off debts more efficiently. 

Conclusion

Deciding which debts to pay off first can feel overwhelming, but taking a structured approach makes it manageable. Start by listing all your debts, prioritise those that could put your home, essential services, or legal obligations at risk, and then tackle non-priority debts using a method that suits your situation.

Remember to budget carefully, communicate openly with creditors, and consider ways to increase your income if possible. Avoid common mistakes like ignoring priority debts, taking on more credit, or missing important letters.

If you feel unsure or need guidance, seeking free, professional advice from MoneyHelper can give you clarity and help you take the right steps safely. The key is to act early, stay consistent, and make informed choices. This approach can reduce stress, protect your finances, and put you on the path to becoming debt-free in 2026. 

Key Takeaways

• List all your debts first – knowing exactly what you owe makes it easier to prioritise and plan. 
• Pay priority debts before non-priority debts – these include rent or mortgage, council tax, energy bills, court fines, child maintenance, and TV licence arrears.  
• Act quickly on urgent debts – ignoring them can lead to court action, bailiffs, or even losing your home.  
• Choose a repayment method for non-priority debts – options include debt avalanche (high-interest first), snowball (small debts first), snowflake (small extra payments), highest balance first, or equal payments. 
• Consider interest rates and urgency – sometimes credit cards should come first, other times loans may need attention depending on cost and risk. 
• Create a realistic budget – track income, essential expenses, and debt payments to see what you can afford and where to cut costs. 
• Look for ways to increase income – part-time work, freelance jobs, or learning a new skill can help you pay off debts faster. 
• Communicate with creditors – be honest, ask for reduced payments, or explore schemes like Breathing Space to prevent further action. 
• Avoid common mistakes – don’t ignore letters, skip minimum payments, or use more credit to repay debts. Stay consistent and organised. 
• Seek professional help early if needed – services like MoneyHelper provide free, impartial guidance to protect your finances and reduce stress. 

FAQs

Should You Pay Smallest or Highest Interest First?

Highest interest (avalanche) saves money long-term; smallest balance (snowball) builds momentum. UK experts recommend interest-first for cost-efficiency after priorities, but choose based on motivation. Overdrafts and cards often top the list due to high rates.

How Do You Create a Debt Repayment Plan?

List all debts, separate priority/non-priority, budget income vs. expenses, calculate affordable payments. Negotiate with creditors or use a Debt Management Plan (DMP). Track and adjust monthly.