Missed Multiple Payments: How to Stabilise Arrears Fast

When someone has missed more than one payment on a debt, the situation is no longer theoretical. Arrears have formed, and creditors are likely following defined processes that escalate over time. The rules governing what happens next depend on the type of debt involved, and the consequences vary significantly between categories.

This article explains how the UK arrears system actually works when multiple payments have been missed. It covers priority and non-priority debts, the legal definitions of arrears, the formal notices and timelines creditors must follow, and the statutory protections that exist. The aim is to give a clear, factual picture of the mechanics at play, so that the rules themselves are understood.

This is not financial advice. It does not tell you what to do. It explains how the system operates.

Missing multiple payments triggers specific legal and regulatory processes depending on the type of debt. These processes are not arbitrary; they follow rules set out in legislation and regulatory handbooks.

The most important distinction is between priority debts and non-priority debts. Priority debts carry the risk of severe consequences such as loss of home, imprisonment, or disconnection from essential services. Non-priority debts, while serious, do not carry these same escalation risks.

• For consumer credit debts, creditors must issue formal statutory notices before they can take enforcement action.
• For mortgages, lenders must follow the FCA's conduct rules, which include defined communication timelines and, in most cases, a commitment not to pursue possession within 12 months of a first missed payment.
• For council tax, the escalation from reminder to court summons to liability order follows a structured sequence with specific costs attached.
• For energy debts, suppliers are regulated by Ofgem and must offer repayment arrangements before considering disconnection, with strict rules and additional protections applying to vulnerable households — disconnection in these cases is tightly restricted and subject to safeguards.

A statutory breathing space scheme exists in England and Wales, providing a 60-day moratorium on enforcement for qualifying individuals.

Priority debts and non-priority debts

UK debt advice frameworks classify certain debts as "priority debts." These are debts where the consequences of non-payment are most severe: loss of home, imprisonment, or disconnection from essential services. Priority debts include mortgage or rent arrears, council tax arrears, utility bills for gas and electricity, court fines, tax debts, and the TV licence.

Non-priority debts, such as credit cards and personal loans, are still subject to enforcement, but the consequences follow a different and generally less immediately severe path.

Water arrears occupy a distinct position. Domestic water supply cannot be disconnected for non-payment — this has been prohibited since 1999 under the Water Industry Act 1991. However, water debts remain important because arrears can still lead to court action and enforcement by bailiffs.

How arrears are formally defined

The word "arrears" has specific technical meanings depending on the type of debt.

• For consumer credit agreements regulated under the Consumer Credit Act 1974, a "notice of sums in arrears" is triggered when a debtor has failed to make payments equivalent to the sum of the last two required payments. The debtor must have been required to make at least two payments before this trigger point is reached, and the shortfall must be no less than the sum of the last two payments due.
• For regulated mortgage contracts, the FCA's Mortgage Conduct of Business rules (MCOB 13) define "arrears" as either a shortfall equivalent to two or more regular payments (measured against accumulated payments due), or remaining in breach for more than one month of an agreed borrowing limit where no regular payment plan exists. The FCA draws a distinction between "payment shortfall" — any missed payment — and "arrears" in the formal sense. This distinction became more significant from November 2024, when revised rules expanded certain lender requirements to cover customers in any payment shortfall, not only those in formal arrears.
• For credit cards, the FCA uses a separate concept called "persistent debt." This is defined as a situation where, over an 18-month period, a customer pays more in interest, fees, and charges than they have repaid of the principal balance. This definition has been in effect since 1 September 2018.

The role of formal notices in consumer credit

Before a creditor can take enforcement action on a consumer credit debt, specific statutory notices must be issued. Under Section 86B of the Consumer Credit Act 1974, when the arrears trigger conditions are met, the creditor must send a "notice of sums in arrears" within 14 days. Failure to send this notice renders the debt unenforceable until the notice is given. Further notices are required at intervals not exceeding six months until the arrears are cleared.

Separately, under Section 87 of the same Act, a default notice must be issued before a creditor can terminate an agreement, demand earlier payment, recover possession, or enforce security following a breach. This default notice must allow at least 14 days for the debtor to remedy the breach (where the breach is capable of remedy) or to pay compensation. If the breach is not remedied within that period, the creditor can then proceed with enforcement action.

Mortgage arrears: how lender obligations work

Under FCA MCOB 13.4.1R, a lender must provide written information to a customer within 15 days of their falling into formal arrears. Broader MCOB 13 protections also apply to customers in payment difficulty more generally, and the revised rules effective from November 2024 expanded certain of these requirements to cover customers in any payment shortfall, not only those meeting the formal two-payment arrears threshold.

A separate, voluntary commitment exists through the Mortgage Charter, agreed in June 2023 between HM Treasury, the FCA, and mortgage lenders. Most major lenders are signatories, and the Charter commits them not to force possession within 12 months of the first missed payment without the borrower's consent, except in exceptional circumstances. This applies to borrowers who engage with their lender.

Under FCA rules, lenders are limited to a maximum of two direct debit attempts in a single calendar month on regulated mortgage contracts. This rule exists to prevent excessive charges from repeated failed direct debit attempts.

Council tax: the escalation sequence

Council tax arrears follow a defined escalation path governed by the Local Government Finance Act 1992 and the Council Tax (Administration and Enforcement) Regulations 1992. When a first instalment payment is missed, the council typically sends a reminder letter — often around 14 days after the missed payment — giving the householder 7 days to pay. A maximum of two such reminder notices can be sent per financial year. If a third payment is missed, a final notice is issued requiring the full annual balance to be paid.

If payment is not made following the final notice, the council can apply to a magistrates' court for a summons. Court costs are added to the account at this stage; these vary by local authority but are often in the region of £100 for the summons, with a further amount (often around £43) added if a liability order is granted. Exact figures differ between councils and may change over time.

Missing a payment and failing to pay within 7 days of a reminder results in loss of the right to pay by instalments, with the full annual balance becoming due. In most cases, some councils may exercise discretion to reinstate instalments if an arrangement is made.

Energy arrears: supplier obligations

Energy suppliers are regulated by Ofgem under standard licence conditions that govern how they must treat customers in arrears. In most cases, suppliers must offer an affordable repayment plan that takes account of the customer's circumstances, though no specific statutory timeframe is prescribed for when this must happen — Ofgem's guidance refers to "reasonable" arrangements.

Suppliers face strict rules on disconnection, and additional protections apply for vulnerable households — disconnection in these cases is tightly restricted and subject to safeguards. Ofgem licence conditions define vulnerability to include, among other categories, households with children, elderly residents, or those with medical needs. Suppliers are required to maintain a Priority Services Register.

Prepayment meters can be installed for arrears recovery, but this requires either the customer's consent or a warrant.

Rent arrears: the possession framework

For assured shorthold tenancies, a landlord seeking possession on rent arrears grounds serves a Section 8 notice under the Housing Act 1988, specifying the grounds relied upon. For rent arrears grounds (Grounds 8, 10, and 11), the notice period is 2 weeks. Proceedings must then be started within 12 months of the notice.

Ground 8 is a mandatory ground for possession, meaning the court must grant a possession order if the ground is proven. The threshold for Ground 8 is at least 2 months' rent in arrears for monthly tenancies (8 weeks for weekly or fortnightly tenancies; 3 months for quarterly or yearly tenancies). Critically, the arrears must exist both at the date the notice is served and at the date of the court hearing. Grounds 10 and 11 are discretionary, meaning the court has the power to consider the circumstances before deciding whether to grant possession.

The Renters' Rights Act 2025 is expected to abolish Section 21 notices and expand Section 8 grounds once commenced. Published government guidance has indicated commencement from 2026, though exact dates should be confirmed against the latest official announcements.

Breathing space: the statutory moratorium

The Debt Respite Scheme, established by the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, provides a statutory moratorium for individuals in debt. This scheme applies in England and Wales only; Scotland has separate statutory moratorium provisions.

A standard breathing space lasts for a maximum of 60 days. During this period, enforcement action is paused and interest and charges are frozen. A mid-point review is required, and the breathing space can be cancelled if the debtor is not engaging with debt advice.

A Mental Health Crisis Breathing Space has no 12-month restriction on repeat applications and lasts for the duration of crisis treatment plus 30 days.

The following are the principal thresholds and timelines established in legislation and regulation.

• Consumer credit arrears (Consumer Credit Act 1974): The notice of sums in arrears is triggered when the debtor's shortfall equals or exceeds the sum of the last two required payments. The creditor must issue this notice within 14 days. A default notice under Section 87 must allow at least 14 days for the debtor to remedy the breach before enforcement.
• Mortgage arrears (FCA MCOB 13): Formal arrears are defined as a shortfall of two or more regular payments. Lenders must provide written information within 15 days of a borrower falling into formal arrears, with broader MCOB 13 protections also applying to customers in payment difficulty. Mortgage Charter signatories have committed to not forcing possession within 12 months of a first missed payment (for borrowers who engage). Lenders may attempt a maximum of 2 direct debits per calendar month.
• Council tax arrears: First reminder typically issued around 14 days after a missed payment, with 7 days to pay. Maximum of two reminders per financial year. Third missed payment triggers a final notice for the full annual balance. Court summons and liability order each add costs to the account; amounts vary by local authority.
• Persistent debt (credit cards): Defined as paying more in interest, fees, and charges than principal over 18 months. Providers must contact the customer at 18, 27, and 36 months. At 36 months, the provider must offer a repayment plan or suspend the card. The repayment plan should normally be structured over 3 to 4 years.
• Breathing space: 60-day moratorium. Eligibility requires a qualifying debt, inability to repay some or all debt, not being in a DRO, IVA, or undischarged bankruptcy, not having had a standard breathing space in the last 12 months, and agreement from a debt adviser that it is appropriate.
• Rent arrears (Ground 8): At least 2 months' rent in arrears at both the date of notice and the date of hearing. Section 8 notice period for rent arrears grounds is 2 weeks.
• High-cost short-term credit (payday loans): Creditors are limited to a maximum of 2 unsuccessful continuous payment authority attempts for the duration of a single loan agreement.

"Payment shortfall" is not the same as "arrears" for mortgages

The FCA distinguishes between any missed payment (a payment shortfall) and the formal definition of arrears (two or more payments behind). The November 2024 rule changes expanded certain requirements to cover payment shortfall customers, which has added complexity to how lenders manage different stages of missed payments.

Council tax instalments can be lost after one missed payment

Many people are unaware that failing to pay within 7 days of a reminder — or missing a third instalment — results in the full annual balance becoming due immediately. The right to pay by instalments is not guaranteed to be reinstated, though in most cases some councils may use discretion.

A default notice is not the same as a notice of sums in arrears

These are two separate statutory notices under the Consumer Credit Act 1974. The notice of sums in arrears (Section 86B) informs the debtor of the arrears position. The default notice (Section 87) is the formal precursor to enforcement action. Both have 14-day requirements, but they serve different legal functions.

Water cannot be disconnected, but it is still treated as important

The prohibition on domestic water disconnection since 1999 means a water company cannot cut off supply. However, water debts can still result in court action and enforcement by bailiffs, which is why water arrears remain significant.

Breathing space does not cover all debts

Certain debts are excluded from the breathing space moratorium, including secured debts (except arrears on them), student loans, court fines, child maintenance, criminal fines, personal injury damages, advance Universal Credit payments, and council tax that has not yet fallen due. Joint debts can be included even if only one party applies, but guarantor loan protections do not extend to the guarantor.

The Mortgage Charter is voluntary, not statutory

The 12-month commitment not to pursue possession is an agreement between lenders and the government, not a legal requirement under the FCA Handbook. It applies to signatory lenders — most major lenders have signed — and is contingent on the borrower engaging with the lender.

• Mortgage payment shortfall vs. formal arrears. From November 2024, FCA rules expanded certain lender obligations to customers in any payment shortfall, not just those meeting the two-payment arrears threshold. Some industry bodies have raised concerns about the operational complexity of distinguishing "conduct arrears" from "prudential arrears."
• FCA forbearance on interest and charges. From November 2024, firms must reduce, waive, or cancel — not merely suspend — interest and charges for customers in sustainable repayment arrangements for consumer credit debts. The change from "suspend, reduce, waive or cancel" to "reduce, waive or cancel" was made to prevent the implication that charges could be reimposed at a later date.
• Scotland and Northern Ireland differences. Council tax collection in Scotland follows a different process. Enforcement is carried out by sheriff officers rather than bailiffs, and some cost figures and procedures differ from those in England and Wales. Northern Ireland does not have council tax at all; it operates a "rates" system collected by Land and Property Services, with its own distinct rules and processes.
• Vulnerable customer protections in energy supply. Suppliers face strict rules and additional protections apply for vulnerable households, with disconnection tightly restricted and subject to safeguards. Ofgem's licence conditions define vulnerability, but the precise definitions may vary by supplier within the broader Ofgem framework.
• Ground 8 rent arrears — the dual-date requirement. For mandatory possession under Ground 8, arrears must exist both when the Section 8 notice is served and at the court hearing. If the tenant reduces arrears below the threshold before the hearing, Ground 8 cannot succeed, although the landlord may still rely on the discretionary grounds.
• Default notices and Buy Now Pay Later. The Section 87 default notice requirement does not apply to regulated deferred payment credit agreements (BNPL), which sit outside the traditional consumer credit enforcement framework.
• Persistent debt — the 27-month stage. FCA rules require providers to communicate at 27 months if the customer is "expected to remain in persistent debt." The interpretation of "expected" may vary between providers, with some using predictive models and others applying simpler thresholds.
• Energy support schemes. The Warm Home Discount provides a one-off £150 discount on electricity bills for eligible households, with eligibility criteria related to low income and receipt of certain benefits. Cold Weather Payments of £25 are made automatically to eligible benefit recipients for each 7-day period where the local temperature is recorded at or below 0°C for 7 consecutive days.

When multiple payments have been missed, several processes may be running simultaneously depending on which debts are involved. Each debt type has its own escalation timeline, its own statutory notice requirements, and its own set of consequences.

• For consumer credit debts, the creditor is required to issue formal notices before taking enforcement action. These notices have defined trigger points and minimum response periods. Until those notices are correctly issued, the debt may not be enforceable.
• For mortgages, lenders are required to make contact within 15 days of a borrower falling into formal arrears, with broader MCOB 13 rules also applying to customers in payment difficulty. Where the lender is a Mortgage Charter signatory, the voluntary commitment provides an additional layer of process around the first 12 months. The FCA has published data indicating that a significant number of mortgages have benefited from Charter options and related forbearance measures since the Charter was introduced in mid-2023.
• For council tax, the path from missed payment to liability order can move relatively quickly, with defined costs accumulating at each stage. The loss of instalment rights after a failed reminder period is a particularly consequential step.
• For energy debts, which according to Ofgem data stood at approximately £4.4 billion across England, Wales, and Scotland as of Q3 2025, suppliers must work with customers on repayment arrangements, and disconnection of vulnerable households is tightly restricted.
• The breathing space scheme offers a 60-day window of protection from enforcement for those who qualify, during which interest and charges are frozen. This scheme is available in England and Wales and requires engagement with a debt adviser.

• Priority Debts: Prioritize mortgage, rent, council tax, and utilities. Consequences are severe (eviction, prison, etc.).
• Statutory Notices: Creditors MUST send specific notices (Notice of Sums in Arrears, Default Notice) before enforcing.
• Breathing Space: A government scheme offers 60-day enforcement protection (England & Wales).
• Mortgage Charter: Signatory lenders won't force possession within 12 months of first missed payment (if you engage).
• Council Tax: Missing just one reminder can trigger the FULL annual bill immediately.
• Energy: Disconnection is rare and tightly regulated, especially for vulnerable households.