About 8 years ago I was in a similar situation with British Gas, with a debt owing of around £1000, I had the same threats that they are making to you. I asked for a prepay meter which they gave me and also took the debt payment at £3.50pw (I think) so every £10 for Gas on the Card, I would have only £7 after standing charges etc, if I put on £20 1 week, they would still only take the £3.50.
It helped me a lot, and eventually paid off the debt, with a extra few lump sum payments, to get the balance down. Once it was paid off I managed to get the normal meter back on, but now I pay by standing order (not direct debit), infact I over pay each month by a few quid, so I'm always in credit.
Not sure what the current situation with them is, but I agreed this a few days before they were to come and cut me off. You just need to insist on speaking to someone a BG who can make a decision.
It can be a real pain, having to go to a paypoint, or post office to top up, but the peace of mind that you will not get cut off, is far better.
Hope it all works out,
Debt Collection Agents are like nappies, They should be changed regularly and for the same reason....
Lets hope i can get something sorted.