Finance glossary
Arrears
In simple terms
Being “in arrears” means you have missed one or more payments you owe — so you are now behind on a bill, loan, rent or mortgage.
On this page
What does arrears mean?
Arrears are payments you were due to make but have not — the overdue amount that has built up on a credit agreement, mortgage, rent, council tax or utility bill. You are described as being “in arrears” until you catch up.
Some payments are simply made “in arrears” by design (paid after the period they cover, like some salaries or utilities). In a debt context, though, arrears usually means missed payments.
How arrears work
Once you miss a payment, the shortfall is recorded and can be reported to credit reference agencies, affecting your credit file for up to six years. Interest or charges may be added, and repeated misses can lead to default and collection action.
Some debts are “priority” — such as your mortgage, rent, council tax and energy — because the consequences of arrears (losing your home, court action, disconnection) are more serious. These should be dealt with first.
How could this affect me?
Arrears can lower your credit score, make future borrowing harder or more expensive, and — for priority debts — risk your home or essential services. Acting early almost always gives you more options.
Lenders must treat customers in financial difficulty fairly and consider reasonable arrangements. Contacting them as soon as you know there is a problem is usually far better than waiting.
Things to watch out for
- Ignoring letters does not pause the problem — charges and action usually escalate.
- Not all debts are equal: clear priority debts (home, council tax, energy) before non-priority ones.
- A repayment plan that is unaffordable can leave you worse off — get free advice first.
Know your rights
- Under FCA rules, lenders must treat you fairly if you are in financial difficulty and consider forbearance, such as reduced or paused payments.
- You can get free, independent debt advice from services such as MoneyHelper, Citizens Advice, StepChange and National Debtline.
- If a lender treats you unfairly, you can complain and escalate to the Financial Ombudsman Service.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- FCA, CONC 7 — arrears, default and recovery (including financial difficulties) (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Dealing with debt — where to start (opens in a new tab). Accessed 22 Aug 2026.