Energy companies to resume debt collection: what to do if you can't pay

Energy companies have been given the green light by Ofgem to start pursuing unpaid bills. Here's what you should do if you have outstanding energy bills

energy bill
(Image credit: iStock)

Energy bills are typically not as much of a concern for most of us during the spring and summer months, but coronavirus changed that in two ways. Firstly, our energy usage has gone up: with most people working from home, it is estimated that an average household has been using a third more energy than is normal for this time of year. 

Secondly, paying for energy bills has been a real struggle for many, especially those who have been furloughed or have seen a significant reduction in income. Millions of people have experienced a severe reduction in income in a very short space of time, which would have restricted their ability to pay off their winter energy bills.

Energy companies were told by Ofgem to suspend debt collection and negotiate with customers to reduce their bill or make alternative payment arrangements while the UK was in lockdown. This week, Ofgem have lifted this restriction, explaining that 'suppliers cannot extend unlimited credit to customers – nor is this in customers' interests overall'.

Where it gets complicated is when Ofgem advise firms against 'aggressive' pursuit of debts, including debt collectors, which technically are still banned from knocking on people's doors until August. That said, what people currently in fuel poverty have been experiencing is vastly different from the official guidelines. There is plenty of evidence that energy providers, including the Big Six, have continued debt enforcement including debt collectors all through lockdown.

Sadly, if you owe your energy company money, they are highly unlikely to be willing to write off the debt, so you'll need a different strategy to pay it off – and then change your energy supplier as soon as you're in the clear.

There are two main things you can do if you have outstanding energy debt. The first is to negotiate a payment plan. This is especially important if you're on a variable tariff and pay quarterly bills – which can be overwhelming to pay off in one go. Ask to split the outstanding amount into monthly – or even weekly – repayments over several months. Most energy providers will agree to this.

If you've lost your job, you need to apply for Universal Credit and then enrol on  the Fuel Direct Scheme that will deduct payments from your allowance. Whichever route is best for you, under no circumstance should you not pay your bill without contacting your energy supplier. The worst-case scenario is that they will either disconnect your supply or install a prepayment meter – which is guaranteed to lose you even more money.

Once you've paid off your debt, switch energy suppliers as soon as you can – don't stay on an expensive variable tariff a minute longer than you need to. Once you are on a new contract, supply your energy provider with meter readings regularly, as this is crucial for avoiding overpaying.

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