How to deal with energy debt
It’s estimated that around 4 million households are in debt with an energy company – collectively owing an eye-watering £507 million.
If you’re struggling to keep up with your monthly gas and electricity payments, take some comfort in the fact you are far from alone, but don’t then ignore the problem – the debt won’t go away, and not facing up to it will only make things worse.
So if you find yourself in falling behind on your energy payments, here’s what to do…
Get in touch with your energy supplier
Your energy company doesn’t want you to be in debt, and will have measures in place to help you pay off in full what you owe – but you need to get in touch and discuss your situation.
It’s best to try and talk to an advisor over the phone - the to-and-fro of emails or letters can be frustrating and drag the issue out unnecessarily – and when you do, they will give you a breakdown of what you owe, ideas on how you can pay it back, and tips on how to avoid getting into debt again.
Although no supplier is legally required to offer you a repayment plan, it’s in their interests to do so – how else could they expect you to pay it back? – so you should discuss whether a weekly, fortnightly, or monthly plan would work best for you, bearing in mind that any repayments will include your current energy use and a portion of your debt.
If you find you’re still struggling once you’ve been placed on a payment plan, get back in touch with your supplier and find out if you can renegotiate to a more affordable plan – never ignore it, as this will only make things worse.
Your energy supplier might also suggest, or even insist, you have prepayment meter installed - the obvious downside to having a prepayment meter installed is that prepayment tariffs are always among the most expensive, so you’ll be paying more for your energy, but it will protect you from falling even further into debt.
Switch to a cheaper tariff
The simplest way to start getting back on track is to switch energy supplier – millions of households across the UK are paying well over the odds for energy simply because they’ve not switched from the out-dated and overpriced tariff their supplier has put them on.
You can switch to a new energy supplier, even if you’re in debt with another one, so long as you owe less than £500 and you’re paying this debt off via a prepayment meter. The new supplier also has to agree to take you on a customer, which they might refuse if you have other debt problems.
For more on prepayment meters, check out Everything you need to know about prepayment meters.
If you are refused a switch because you’re in debt, you can make a complaint to try and get the decision reversed – but before you take it to the energy ombudsman, you must first raise a complaint with your energy company and give it an opportunity to resolve the issue.
The threat of disconnection
If you haven’t paid a bill after 28 days, your supplier might threaten you with disconnection – it’s unlikely you will actually be cut off as disconnection is the last resort for energy suppliers, but it does happen in cases where all other options have been exhausted.
Before they can disconnect you, your supplier must send you a disconnection notice, which can’t be sent until at least 28 days after your last bill was issued, and they need to give you at least seven days written notice before cutting off the power.
If you are a pensioner, have long-term health problems, are disabled, have serious debt problems, or have young children living at home there are measures in place to ensure you don’t have your supply cut off.
The Big Six energy companies have all signed up to an agreement that guarantees these safeguards, but while other suppliers should take your circumstances into account when considering disconnection, they’re not obliged to.
If you think you’ve been unfairly threatened with disconnection, you need to contact your supplier and explain your situation – they can’t then disconnect you until someone has visited your home to personally check your situation.
If they disconnect you without anyone visiting your property, you should make a complaint to your supplier. It you’re still not happy with the decision to disconnect you, or there is no decision within eight weeks, you can then take your complaint to the energy ombudsman.
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