Tackling your debts

Are energy debts leaving you cold?

Posted 23 October 2013

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Nearly one in 10 people are already in arrears with gas, electricity and water bills, according to research by Debt Advisory Centre - and winter is just beginning.

More than 4.5 million people in the UK owe money to their gas, electricity or water company.

This was according to research by Debt Advisory Centre conducted in October 2013. That’s twice as many as told DAC they were in arrears when we did similar research in March.

If you're one of the many customers who have only been able to pay part (or none) of your bill, you risk having your gas and electricity cut off - just as the weather turns nasty.

Priority bills

Gas, electricity and water bills are known as 'priority bills', because they are essential services: it's very difficult to survive without energy or water in your home.

This doesn’t mean you should ignore other bills, such as credit card and personal loan payments. But if you are having difficulty making ends meet, your priority bills - along with your rent or mortgage and council tax - are the ones you should deal with first.

Switching providers with energy debt

One way to cut the amount you're spending on gas and electricity is to switch to a cheaper tariff offered by a different provider. But your existing provider may not let you change if you owe it money.

Whether you are allowed to switch depends on how long you have owed the money and what kind of meter you have.

If you have been in arrears for less than 28 days, you should be able to change supplier, and have the amount you owe transferred to the new supplier.

You may also be able to switch if you have a pre-payment meter (installed after you built up your debts). In this situation, you should be able to switch provider and transfer debts of up to £500 for electricity and up to £500 for gas.

Debt blocked

If you are not on a pre-payment meter and have owed money to your provider for more than 28 days, it can stop you from switching to a different provider. This is known as being 'debt blocked'.

Paying off gas and electricity arrears

You do risk being cut off if you don’t clear your energy arrears. But your provider doesn’t want you to freeze, so contact it about your energy debts as soon as possible. It should offer you a payment plan to pay off your arrears at a rate you can afford.

Using a budget planner should help you work out how much you can repay each month. It’s important not to over-estimate the amount you can afford - if you miss a payment, the supplier may insist on installing a pre-payment meter in your home.

Help with water bills

Unfortunately, you can’t switch water companies to save money, but if you live alone or don’t use much water you may be able to cut your bills by asking your provider to install a water meter. If you are on certain benefits and have a water meter, you may also qualify for the WaterSure tariff, which caps the amount you have to pay.

If you are in arrears, you should contact your water company as soon as possible. Water companies offer payment plans to help you repay over a longer time, and they may refer you to a charitable trust or hardship fund which could help you pay your bill.

Your water company can’t cut off your supply, but if you continue to owe it money, you could end up with a Country Court Judgment (CCJ) or even a visit from bailiffs, who could take your belongings to sell and raise money to cover your water debt. This wouldn't happen straight away - but you should get in touch and try to find a way to repay what you owe.

Seek expert help

Sometimes sorting out debts by yourself is just too much of a struggle.

Debt Advisory Centre may be able to suggest a solution to help you get back in control of your finances. Fill in the form on this page and we'll call you to talk about your options.

by Sarah Symons

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