Categorise technical debt based on its impact on scalability, performance, security and maintainability and prioritise it! Address high priority items along with new features! Also set aside a fixed percentage of time for each sprint for tech debt! Instead of one time overhaul, chip away at technical debt a piece at a time to to ensure continuous improvement!

When juggling technical debt and new features, I’ve learned one thing: prioritize like a pro, or you’ll drown in the backlog. What worked for me? Treat tech debt like an aging credit card bill—ignore it too long, and the interest skyrockets. Instead of postponing, I align debt with feature development. Fixing debt while shipping new features? That’s the sweet spot. Most importantly, speak the language of impact—show stakeholders how reducing tech debt fuels faster releases. Balance isn’t about choosing one; it’s about making both work together.

As a Product Owner, I will prioritize this scenario using the Eisenhower Matrix. First, I'd assess the urgency and impact of addressing technical debt vs. introducing new features. In collaboration with the key stakeholders/project sponsors and development team, we shall focus on high-priority technical debt that could impact future features or the overall quality and timeline, while also ensuring that essential new features are delivered. Collaboratively, we must allocate dedicated time for both, ensuring technical debt doesn’t hinder new feature development, and emphasize refactoring as part of continuous improvement. THis way, I can ensure both short-term value and long-term stability.

It is always good to keep a certain percentage of capacity aside to address technical debt, but percentage can vary considering the priority of new business requirements committed.What I mean is there can be times when we can allot 10 perc to address technical debt, but there will times when u can only afford 5 perc considering the business commitments.So striking the right balance is more important and shud be done thru proper collaboration with Tech and Business and by fostering environment which promotes transparency.

I would approach this by assesing the technical debt and Business priorities based on the overall impact to the Business. Use a prioritization method MOSCOW or impact/effort matrix and then refine the sprint based on the Sprint capacity. I would also communicate wih the stakeholders and align on the refined sprint scope.