Utility Bill Debt

Overview

As the cost of living continues to rise gas and electricity bills are expected to hit record highs.

Everyone needs gas, water and electricity to keep their home running and to live in comfort. However, the sad reality for many is that it’s cost they’re struggling to pay.

Are utility bills priority debts?

Yes. Utility bills are considered priority bills because suppliers can disconnect your gas, electric, or phone service if you fail to pay or fall into arrears.

What are utility bills?

The term utilities refers to the things you need to keep your home running.

When we speak about utility bills, or energy bills, we tend to mean payment for:

  • Gas
  • Electricity
  • Water

The umbrella term of utilities refers to more than just that. It can also cover heating, telephone and internet connections.

You can pay for your energy bills in two ways, either as a fixed rate to your energy supplier or pay an amount based on energy use.

It’s also important to note that how you pay for water bills differs depending on where you live in the UK.

Water costs are included in your council tax bill if you live in Scotland, however, if you live in England, Wales or Northern Ireland you’ll need to pay this bill separately.

What causes utility bill debt?

There are a wide range of reasons that could cause you to fall behind on your household bills.

Juggling energy costs whilst keeping food on the table and a roof over your head, especially on a low income, isn’t always easy and its understandable how you could find yourself in financial difficulties.

Some of the most common causes of utility bill debt include.

Here are many reasons why a person may fall behind on their utility bills. Here we examine some of the most common reasons why people struggle to keep up with payments.

Price rises

Energy companies are known to regularly increase their energy prices in line with the energy price cap.

The price cap allows energy companies to pass on all reasonable costs to customers, including increases in the cost of buying gas.

From April 2022 the price cap will increase by £693 – a dramatic increase for more than 22 million people around the UK.

Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year. Prepayment customers will see an increase of £708 from £1,309 to £2,017.

The increase is driven by a record rise in global gas prices over the last 6 months, with wholesale prices quadrupling in the last year.

Understandably, changes such as this can make paying for energy bills much more difficult.

Incorrect estimates

Problems can also arise when usage estimates are wrongly calculated.

Your bills are usually calculated by your energy provider based on what it thinks you’ll use throughout the year.

While it may be tempting not to own up to an estimate that’s lower than you’d expect, honesty is always the best policy.

Always flag if you’re using more gas or electricity than your estimate states. If you don’t that could lead to energy debt when you’re eventually sent the bill for the difference.

Just as you should flag if you’re being charged too little, you should contact your supplier if you’re being charged for incorrect higher usage to reduce your bills.

Human error

Mistakes happen. Misplacing an energy bill doesn’t always mean you’re trying to hide from your utility company. Sometimes it really can be something as simple as human error.

If that happens and you forget to pay your energy bills the most important thing is to contact your supplier straight away to explain and pay what you owe.

Changing supplier

Just as human error can lead to misplaced energy bills, so can switching supplier.

While every effort is always made to ensure a smooth transfer of gas and electricity, it isn’t unheard of for people to find themselves faced with missed payments from a previous provider if the system hasn’t been updated.

Unexpected expenses

Having an emergency fund for financial emergency is important but not a reality for everyone – especially if you live on a low income.

As such, when an unexpected expense occurs – such as a broken boiler – it often takes priority and can leave you without funds to pay your energy bills.

From April 2022 the price cap will increase by £693 – a dramatic increase for more than 22 million people around the UK.

What happens if you don't pay your energy bills?

If you find yourself struggling with energy debts it’s important to speak to your suppliers as soon as possible.

You should contact the energy suppliers and explain your situation and work together to come up with a payment plan that suits you. One option could involve installing a prepayment meter in your home instead of providing monthly meter readings.

When talking with energy suppliers about your new repayment plan, it’s important that the arrangement is realistic and works with your affordability.

Failure to negotiate with your supplier could result in them disconnecting your supply. Energy suppliers will also pursue you for payment of energy arrears the same way any other credit would.

Actions can range from enforcement by bailiffs to threatening court action. That’s why it’s important to you should seek debt advice if you’re unable to pay your energy debt.

What is the Fuel Direct scheme?

If you’re worried about being able to pay for your energy supply you should be aware of the financial support you may be entitled to.

If you receive benefits you may be able to arrange for payments to be taken directly from what you receive through a scheme called Fuel Direct.

The scheme is designed to help vulnerable people living with energy arrears, however, it should only be used as a last resort.

Energy payments will be made directly to suppliers and can prevent you from being cut off. The Fuel Direct scheme also take away the pressure of making payments on your own.

Details of the scheme can be found at your local Jobcentre Plus.

Can I get help with my energy bills?

You may be entitled to financial support to help you pay your gas and electricity bills.

Support for pensioners

UK pensioners are entitled to a winter fuel payment. This is a lump sum from the Government that helps pay your energy bills during the cold winter nights.

If you were born on or before September 26, 1955 you could receive between £100 and £300 to help you pay your heating bills.

You don’t need to apply and should receive the payment automatically.

More information about the winter fuel payment here.

Benefit help

If you’re on a low income, paying for ever rising energy costs can be tough.

It’s important to be aware of your benefit entitlement if you’re struggling to pay gas and electricity bills. There are a number of benefits that will automatically make you eligible for Government support. These include:

  • Universal credit
  • Pension credit
  • Income support
  • Income-based jobseeker’s allowance
  • Income-related employment and support allowance

You can find out more about whether you’re eligible for support on here on the gov.uk website.

What government schemes could help with energy costs?

There are various government schemes that can help you avoid gas and electricity arrears – especially during the winter.

Cold weather payment

This scheme subsidises energy bills for those living on a low income during the winter when they are more likely to use more energy than the rest of the year.

You’ll get a payment if the average temperature in your area is recorded as, or forecast to be, zero degrees Celsius or below over seven consecutive days.

You’ll get £25 for each seven day period of very cold weather between 1 November and 31 March.

You must meet certain eligibility criteria to qualify for the cold weather payments. Find out more here.

Warm home discount

Much like the cold winter payment the warm home discount scheme is run by the Government. It’s designed to help people struggling to pay for expenses like their gas or electricity bill.

The warm home discount is a one-off £140 payment that is made available to those living on a low income.

You can find out more about the scheme and whether you qualify on the Government website.

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How do I avoid utility bill debt?

Utilities such as gas, electricity and water are daily essentials and often their cost isn’t something we give much thought.

However, falling into financial difficulty and debt with utility bills isn’t as difficult as you may think.

From price hikes by energy companies to lost bills or wildly inaccurate estimates there are a whole host of reasons why someone could struggle to repay their utility bills.

Regardless of the reason, it’s important not to ignore any problems that may arise surrounding this type of debt.

Hiding from the problem or pretending it isn’t happening won’t make the issue go away and it is important to have a proactive approach should you find yourself falling behind on payments.

How can I stay on top of utility bill debt?

If you find yourself struggling to repay utility bill debt, it’s important to be open and honest about your situation with your supplier.

By speaking to the utility companies, you can arrange to spread the cost of what you owe over a period of time. It will also allow you to discuss potentially having a pre-payment meter installed to prevent future debts building up.

You should also check if you are entitled to additional financial support to cover the cost of your utility bills. If you receive benefits you may be able to have payments made directly to the utility companies through the Fuel Direct scheme which will save you having to organise payment yourself.

This can be a good option if you face having your energy supply being cut off as it shows suppliers you are prepared to repay what you owe.

For further information about the Fuel Direct scheme, please speak to a member of staff at your local Jobcentre Plus.

How can I avoid utility bill debt?

Utility bill debts are considered to be priority debts. That means you should make every effort to avoid falling behind on your payment plan.

Check comparisons

While this rule doesn’t apply at the moment during the energy crisis, when the industry stabilises it’s good practice to compare prices between energy suppliers.

It might seem time consuming but using a price comparison site can make a daunting task much easier.

You shouldn’t stay with a supplier out of habit as you may not be getting the best deal. You could save decent money if you switch energy supplier.

Taking the time to compare prices from different companies might seem time-consuming but can save you money in the long run. It can be all too easy to stick with a supplier out of habit, but the reality is they might not offer the best deal. You could save hundreds of pounds a year by switching.

Plan your budget

Be sure to include energy and water bills in your monthly budget.

These are priority debts and should be treated with importance each month. You should be particularly cautious if you pay with direct debit and must make sure you have enough money to avoid being overdrawn when the bill is due.

Pay by direct debt

That being said automatic payments, such as direct debt, can make avoiding energy debt easier.

Contact your supplier to arrange for payment to be taken on or around pay day to ensure that you have the funds in your account.

It’s a simple way to make sure you always pay your bills on time.

What debt advice is available for utility bill debt?

What debt advice is available for utility bill debt?

More people than ever before are struggling to pay their energy bills.

If you’re worried about how much energy debt you have or if you owe money to an energy company, talk to Your Debt Expert.

Our teams are experienced in providing debt help to those in financial hardship and can identify a debt solution tailored to your needs. You could even reduce bills to one affordable monthly payment, freeze interest and stop pressure to pay what you can’t afford by energy suppliers.

Contact us today on  0800 082 8086

Where can I get more advice on Utility Bill Debt and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 082 8086 or click the button below to get started