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Using redundancy pay wisely

A lump sum feels like a solution, but the order in which you use it matters.

Debts After Redundancy3 min readReviewed July 2026

Priority bills (rent/mortgage, council tax, essential utilities) come first, then a small buffer for the months ahead, then debt reduction.

Clearing a high-interest debt in full can be sensible; part-paying several usually isn't. A structured plan protects the money longer.

If a formal solution is likely (DRO, IVA, bankruptcy) get support before spending large sums — how the money is used affects eligibility.

General information, not personalised adviceThis article is written to inform. It isn't personalised debt or legal advice, and Debt Compass is not authorised by the Financial Conduct Authority. A team member can talk you through the options and point you to a free debt help service or authorised insolvency practitioner before you decide on anything.

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