Changing energy suppliers when you’re in debt

Written by PayPlan on 12 March 2018

We all want to pay less for our energy – especially in the winter months – but what if you’re looking to change energy supplier but still owe them money?

Whether it’s a new debt from your most recent bill that cost more than expected or an older debt that you’re perhaps disputing, we’ve taken a look at the issue of switching energy supplier when in debt and if it can be done:

Can I change energy supplier if I am in debt?

Yes! It can be done but there are certain restrictions you’ll need to take into consideration – whether you are on a prepayment meter or pay monthly/quarterly for your energy.

If you have a prepayment meter

If you owe less than £500 and have a prepayment meter, you can switch energy supplier. But bear in mind the new supplier will have to agree to take on this debt and you will need to then repay them. This is because of something called the Debt Assignment Protocol, set up by Ofgem, which means you must be able to switch to a cheaper supplier if your debt is below a certain amount.

If you owe more than £500 in energy bill arrears and have a prepayment meter, then you will need to reduce this amount to be able to switch supplier. You could do this by looking into ways of increasing the amount you pay back each month.

How to reduce your energy debt on a prepayment meter

Cutting back on unnecessary expenses, putting a budget in place and cancelling subscriptions you no longer need are just a few ways you can free up cash.

You could arrange to set up a repayment plan if you are in debt, with whatever you pay onto your prepayment meter used to cover the cost of what you owe and the amount of energy you use. However, if you owe a significant amount then it may be a good idea to consider seeking advice and taking on a debt solution to make an impact on the amount owed.

We have a guide here on the site that features more ideas on how to tackle your debts.

If you pay your bills monthly or quarterly

If the debt is less than 28 days old

If you have been in debt to your energy supplier for less than 28 days, you can still switch to a cheaper alternative. However, the debt you owe will be added to your final bill – which is sent to you once the account is closed. You will then have to deal with this final bill separately to the ones sent by your new supplier.

If the debt is more than 28 days old

If your debt is more than 28 days old, then you will need to repay this before you are able to switch to another energy supplier – even if they are less than £500. This limit only applies on prepayment meters.

If you are struggling to repay your estimated bills and debts, then you could think about having a prepayment meter installed. They can be a little more expensive when it comes to paying for the energy you use, but they are a good way of monitoring your usage and never spending more than you can afford.

What if my energy bills are not my fault?

If your energy bill debts are not your fault – for example, if your energy supplier wrongly underestimated what you needed to pay – then they cannot stop you from switching supplier. It’s worth noting the debt will still need to be paid, when you receive your final bill though.

The first port of call, if you want to remove energy debt, is to speak to your energy supplier. They want their money and so they will do what they can to help you repay it in full.

Many will help you set up a repayment plan, where you agree to a set weekly or monthly instalment and pay this on top of your energy usage to clear your debts.

There are a number of debt solutions available which can help when it comes to repaying debts. These include basic solutions, such as debt management plans to insolvency solutions including IVAs (individual voluntary arrangements) and DROs (debt relief orders).

We have more information about debt solutions here on the site.

If you need to talk to someone about your energy bill debts, we have a team of experts here at PayPlan who can offer free, impartial advice about your situation. Simply call 0808 278 6944 or fill out our contact form and someone will be in touch.

Filed under Debt Facts

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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