We may feel on top of borrowing, but arrears on essentials like rent and council tax are becoming the new face of debt and they can cost us more than we think.
For years, debt has meant the same thing. Credit cards, loans and overdrafts have been the main worry when money is tight.
That’s still part of the picture, but it’s no longer the whole story. More households are now falling behind on essential bills instead. This shift is not about reckless borrowing. It is about essentials taking up a bigger share of the budget.
So debt has not disappeared. It has shifted into something less obvious, but often more serious.
Priority bills and why they matter
When people talk about arrears, they mean falling behind on essential bills. We especially do not want to fall behind on priority bills. These are the things that if we don’t pay, we may end up in court with a conviction, or even evicted.
Priority bills that we cannot avoid include rent or mortgage payments, council tax, a tv license and water rates. Priority bills that we still have to pay but have options to reduce include energy, phone, broadband bills and home contents insurance.
It’s important we pay these bills before non-priority debts like credit cards or personal loans.
What happens when we don’t pay priority bills?
Rent arrears can mean court action and, in the worst cases, eviction.
Council tax debt can quickly escalate through the courts, leading to enforcement action like bailiffs or money being taken directly from wages or benefits. In extreme situations, it can even lead to prison.
Mortgage arrears can also end up in court and, if unresolved, result in repossession.
Energy debts don’t usually lead to prison or eviction, but suppliers can take steps like installing prepayment meters or enforcing repayments.
This is why these bills are treated as a priority. The risks are tied to legal powers and essential services, not just money owed.
StepChange has a guide on knowing which bills we should prioritise first. Check it out on their website.
Act early to stay in control
Falling behind on bills can feel overwhelming, especially once letters start to arrive. But acting early can make a real difference.
Building a budget is a great place to start. The Quids in! Budget Planner breaks down bills into four categories based on which should be paid first: costs we cannot avoid, bills we must pay but can control, essentials we could get cheaper, and things we want to make life easier. We can use the Budget Planner online.
If bills are starting to slip, it’s worth getting support sooner rather than later. Many councils, landlords and energy suppliers will work with people who reach out, offering payment plans or temporary support.
We’ve pulled together free, trusted help on our useful links page to point things in the right direction.
Image: Vyacheslav Dumchev/Getty Images
