Step 4: Identify your priority debts

After making sure you have as much money coming in as possible, reducing your expenses and making a financial statement, the next step is prioritising your financial commitments.

List any debts or credit agreements you have as priority or non-priority. Debts are classed as a priority if failing to pay would result in serious action – such as your home being repossessed. These may include unpaid rent, tax, utility bills, fines or hire purchase agreements. Put them in order of importance so you can see what needs to be paid first. Once you’ve identified a priority debt, act immediately. Contact your creditors to tell them about your current financial situation.

If you can afford to make payments, try to agree on how much you can afford to pay and when. If you can’t afford to make payments, get advice from a debt adviser straight away. Organisations such as PayPlan, StepChange Debt Charity and Citizens Advice can help you negotiate with your creditors.

List all your debts

Any credit agreements or debts you have are split into two groups: priority and non-priority. It’s important to understand who your priority creditors are and contact them as soon as possible.

It’s important to keep track of your debts and to prioritise them depending on whether they’re priority or non-priority. You might find it helpful to use a table like the one below. You could start by jotting down all your debts, then putting them in order of importance so you can clearly see which priority debts should be paid first.

Debt (original creditor)Type of debt (priority or non-priority)Amount owedAgreed payment (weekly or monthly)Transferred to (if your original debt is sold on to collection agencies)

Identify priority (urgent) debts

Priority debts are the most important debts that have serious consequences for non-payment. You should deal with these debts as soon as possible. Non-priority debts should be paid but have less serious consequences for you than a priority debt. These debts are paid only after you have met your priority debts. There is more information about non-priority debts in the next step.

The following types of debt would be classed as priority debts:

Mortgage (secured loan) payments

If mortgage payments are not made for a few months, your property or home may be taken by your mortgage provider (repossessed) and sold to pay your debt. It is important to talk to your lender if you are having difficulty with paying. There are schemes designed to help people pay the interest element of their mortgage. For further details, visit the GOV.UK website.

Unpaid rent (rent arrears)

You could be made to leave your flat (evicted) if you fall behind on your rent. If you have made an application for Housing Benefit, it’s important to make sure your landlord is aware of this.

Council tax in England and Wales

If you don’t pay your council tax, your local authority can look at sending bailiffs (now known as enforcement agents) to your home. These agents can try to seize your possessions. Your local authority could also deduct money from your income or benefits.

Council tax in Scotland

If you don’t pay your council tax, you could be taken to court. If you still don’t pay, they could take further action, including deductions from your income or benefits, or sending sheriff’s officers to your home. These officers can try to seize your possessions.

Rates in Northern Ireland

If you don’t pay your rates, you could be taken to court by the Land & Property Services. If you still don’t pay, they could take further action, including deductions from your wages or a charge being put against your property.

Unpaid gas or electric bills

Your gas and/or electricity may be disconnected if you don’t pay these debts. Explaining your circumstances to your energy supplier may stop this from happening. If you’re classed as ‘vulnerable’ (for age, health, disability or severe financial insecurity reasons) and are unable to pay your bills, most of the major energy suppliers will not disconnect your supply. But you have to let them know that you’re classed as ‘vulnerable’ to be placed on the priority services register.

Fines, maintenance and compensation orders

If these are unpaid, a bailiff (enforcement agent) may be sent to try and seize your possessions. You could also be sent to prison. In Scotland, these are enforced through the sheriff court.

TV licence

You may face a magistrates’ court or sheriff court fine for failing to pay this. See note on Fines, maintenance and compensation orders above.

Tax and VAT

If you don’t pay these, the government may recover the money you owe using commercial debt collectors or by taking your belongings (bailiff/sheriff officer action), or they may take you to court.

Hire purchase and conditional sale agreements

Items you have purchased using these methods may be taken back (repossessed) by the finance provider if you don’t follow the agreed payments.

Parking penalties

If you don’t pay these, civil action could be taken and your vehicle could be taken. These penalties may sometimes be treated as priority debts. You should take advice on how to deal with these.

Other priority debts

You may also have other priority debts that are specific to your needs. You should be able to prove why you consider each debt a priority.

Contact your priority creditors

Once you have identified a priority debt, you should take immediate action:

  • Contact your priority creditors by telephone to explain why you are in debt and agree what to do.
  • If you are still in the process of sorting out your finances, you could request that no further action is taken until you have had a chance to do this by sending a holding letter. This is a letter that requests more time to sort out your debt plan. It explains your situation and asks creditors to temporarily stop any action against you. Always ask them to freeze the interest and stop any penalty fees so your debt doesn’t get worse. See this sample of a holding letter.
  • However, you should try to make the regular payment in the meantime. If you can’t, pay as much as you can afford.

Although it may feel like a difficult thing to do, it’s best to tell your creditors that you or the person you care for has been diagnosed with cancer.

Many priority creditors will have a policy about giving people time if they contact them by phone. Make a note of all telephone calls and meetings, including the name of the person you spoke to and what you agreed. Follow up the call with a letter, confirming what was said on the phone. Keep copies of all letters you send to them.

If you can afford to make payments

If you have some disposable income, try to agree on how much to pay and when. You can do this yourself, or contact an organisation such as Advice UK or Advice NI.

If you can’t afford to make payments

If you have no disposable income and cannot afford to pay anything back to your priority creditor, get advice from an organisation such as StepChange Debt Charity, PayPlan or the National Debtline straight away. A debt advisor can help you to work out what is the best thing to do in your situation.

Ask the priority creditor to stop further action until you have got advice. However, you should try to pay at least the regular instalment in the meantime. If you can't do this, pay as much as you can afford.

What to tell priority creditors

Most creditors should consider your offer for repayment, as long as it is reasonable. To show this, you should tell them:

  • how much disposable income you have (send a copy of the financial statement you created in step 3)
  • how many priority debts you have
  • whether your situation is likely to get better or not. It’s important that you get expert advice during this process to ensure you maximise your or your family’s income. Organisations such as Citizens Advice, Advice NI and Turn2us may be able to help you.

Next steps

  • List all your debts and identify your priority debts.
  • Call the Macmillan financial guides on 0808 808 00 00.
  • Phone the priority creditors to explain your situation and ask for more time if needed (see this sample holding letter).
  • If you can, agree a payment arrangement with your priority creditor.
  • If you can’t afford to pay your priority debts, contact an organisation that provides debt advice straight away. PayPlan, StepChange Debt Charity or the National Debtline may be able to help you.

Back to Managing debt and borrowing

Debt and borrowing overview

Living with cancer can bring extra expenses. Learn how to manage your debts using a clear step-by-step process.

Step 1: Increase your income

Increasing your income is the first step to managing your debts. Check your entitlement to benefits and insurance payouts.

Step 2: Reduce your expenses

Once you have made sure you have as much money coming in as possible, there are ways you can reduce your expenses.

Debts you leave behind

If you have debts when you die, it reduces the value of your estate. This means your beneficiaries will receive less money.