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Priority debt and expenses

Prioritise your debt

Some bills are classed as priorities. This is because the consequences of not paying them are more serious than the consequences of not paying others.

Therefore if you’re struggling to make your repayments on time, you need to look at all your debts and split them into:

  • priority debts
  • non-priority debts

Once priority debts and living expenses, such as food, have been paid, you will need to pay your non-priority debts based on how much money you have left.

Read the Money Advice Service's guide on how to prioritise your debts properly.

If you have nothing left to pay non-priority debts, you must say so. Show your creditors by sending them your financial statement.

A financial statement is the document sent to creditors to represent your financial circumstances. Great care must be taken to ensure it is fair and correct. From the financial statement you will be able to calculate whether or not there is any income to make offers to non-priority creditors. Contact debt advice charities for further help.

Manage your expenses

When you are in debt and owe creditors, you should work out how much money you have to pay out each month on basic living expenses first. This will ensure you have enough money to pay for items such as food and fuel. You should include these on include these on your financial statement.

Look around for good deals and cut costs where you can:

  • Council Tax - Check whether you are entitled to help to pay your council tax and see if you can pay in weekly or monthly instalments. Many councils ask for the amount paid over 10 months rather than 12
  • Water charges - Water companies may accept weekly or monthly payments rather than half yearly
  • Gas and electricity - Work out the cost of your bills over the year. Divide by 12 if you are budgeting monthly. You can ask to pay by budget scheme or have a meter installed. Ask your local council about home insulation grants. If you are on Income Support or Job Seekers Allowance (JSA) you can pay for your arrears by Fuel Direct
  • Food and household items - For food, put down the amount you spend on your weekly shopping. You should also include the cost of household items, for example, washing powder, soap, shampoo, toothpaste, sanitary towels and razors. If you are not sure exactly how much you spend on food and household items, allow about £20 per week for each person who lives with you. However, if you or anyone else who lives with you needs a special diet (for example, a diabetic) or has other special needs, you will need to increase this amount. You should explain this on any letter you write to your creditors
  • TV licence - Spread the cost of your colour TV Licence in weekly or monthly payments, from as little as £5.60 per week. Visit the TV licensing website to find out more
  • Essential travelling expenses - These should include travelling to work, school and for shopping. If you are running a car, include the cost of tax, insurance, repairs, MOT and servicing as well as petrol
  • Clothing - Look at your clothing expenses over a year. Only include non-dependants if you pay for their clothing. Remember to include school uniforms. As a rough guide, allow £5 per person per week.