How best to handle energy debt?

sourcrates

sammyjammy said:

I have colleague at work that I help with his DIY DMP, we've just redone his SOA and it comes out that he has no money to repay his debt as of this month, one creditor has already responded and put his account on hold for 90 days, I am sure the others will follow suit but am curious as to what people will think the longer term consequences are as many will soon be in the same situation.  An increases in CCJs isn't going to get them money that isn't there!

It will result in lots of people having there accounts put on hold, and the ones with the least ability to pay, will likely have them written off.

Major mainstream lenders will weather the storm, others may not be so lucky, these things have a habit of escalating into areas, no one even though of, time will tell I guess.

For those that don`t have the money, no amount of legal action can make them pay, it will just add to companies losses.

Sea_Shell

So the consensus seems to be that as you can't get blood out of a stone, you should make sure you're fed and warm over winter, and worry about the debt later, as they can't take what you don't have, and are unlikely to be cutting people off by their 1000s as that would be politically unacceptable.   

However, the problem lies with those cases where there IS still some blood left in the stone, and very hard decisions are going to be need to be made around what is a real necessity and what there is potentially some wriggle room with.

Standards of living are going to have to drop, if people really want to avoid literally having no "blood left in the stone" to take.

These are going to be the hardest conversations!!

Sonic101

I'm grateful that someone has brought up the issue of energy bills and for the helpful responses - been wondering the same thing. Being on a modest income I'm a bit worried about how I'll manage if utility bills go through the roof when my current deal ends at the beginning of next year, and dread to think what it must be like for people worse off than me :-(

For many it is (or is going to be) a case of "can't pay" not "won't pay" - we can only offer what we can afford. As others have said, they can't get blood out of a stone! 

There’s some interesting information/discussion on this on the Debt Camel site (https://debtcamel.co.uk/#) under “COST OF LIVING.

enthusiasticsaver

As  we get more into winter this will be a question which will come up more and more.  I looked at my bills over the last year and our bill for January to June this year was twice as much as June to December last year even though the usage was halved.  This follows that our bill for June to December this year will be at least four times as much as last year if not more considering the prices are due to go up by 70% in October.  

My advice would definitely not be to get a loan out to pay bills.  If people cannot afford the bills they cannot afford to borrow either.  The energy companies cannot cut you off and they should not charge interest so the answer is to pay what  you can afford even if building up energy arrears is the result. I doubt they will be taking vast amounts of people to court  but obviously this will affect credit records. I am changing my direct debit at every opportunity I get given we are in credit but they keep persisting in telling us to increase the direct debit.  Some people will have no choice but to cancel their direct debits if the energy companies do not come to a reduced arrangement.  There are supposed to be relief funds for special cases so it is worth checking if you are eligible for help but the ultimate may be you tell the energy company what you can afford and move to standing order. 

Our plan is  to postpone holidays, cut back on personal expenditure and entertainment, gifts and meals out.  Many people will not have these options and will instead have to choose between heating and eating which is tragic.  I cannot see how the government will not be forced to intervene. 

Sea_Shell

Thanks for that comprehensive answer @enthusiasticsaver

My family member in question, can still make cut-backs in discretionary spending, but won't want to.   But I worry that they'll just get further and further into their overdraft, if they don't make some hard choices very soon!!

The MH aspect of having to cut "life" to the bone, could be worse that the debt itself.    But at what price that cheeky "pick me up"?

sourcrates

enthusiasticsaver said:

 There are supposed to be relief funds for special cases so it is worth checking if you are eligible for help 

To qualify, in most cases, you have to be on some sort of means tested benefit, and on the bones of your backside basically, you must already have some arrears, and have to agree to a 3 month payment plan, only then, after that is successfully completed, will they write off your balance.

Now that takes care of any arrears, but what about going forward, future bills, more increases, it will be a case of rinse and re-peat for a lot of people.

molerat

One of the possibly negative points of a smart meter is that it can be switched to PAYG remotely. No court orders, site visits or bailiffs required  It is being reported that the energy companies are looking at their options in light of the current crisis.  Simply not paying will not be an option if you have a functioning smart meter.

https://uk.finance.yahoo.com/news/smart-meter-users-could-moved-050000342.html

fatbelly

molerat said:

One of the possibly negative points of a smart meter is that it can be switched to PAYG remotely. No court orders, site visits or bailiffs required  It is being reported that the energy companies are looking at their options in light of the current crisis.  Simply not paying will not be an option if you have a functioning smart meter.

https://uk.finance.yahoo.com/news/smart-meter-users-could-moved-050000342.html

Yes, this is rarely mentioned though I believe (in normal times) it happens 70,000 times per year.

Much easier than getting a magistrates warrant and an engineer attending and forcibly installing a new meter.

Sea_Shell

But there is a big difference between willful non payment (of any amount) and either trying to keep your DD low, or paying what you can afford.

It sounds like due process still needs to followed...

"The need for a warrant does not apply when suppliers are switching smart meters to prepayment mode remotely. However, Ofgem, the energy regulator, has said suppliers must give customers four weeks to settle debts, and a further week’s notice before switching.

Ofgem has strict rules on converting customers to prepayment. A supplier must take a customer’s financial circumstances into account and they should also be allowed to repay debt over a number of months, before turning to prepayment."

lordmountararat

molerat said:

One of the possibly negative points of a smart meter is that it can be switched to PAYG remotely. No court orders, site visits or bailiffs required  It is being reported that the energy companies are looking at their options in light of the current crisis.  Simply not paying will not be an option if you have a functioning smart meter.

https://uk.finance.yahoo.com/news/smart-meter-users-could-moved-050000342.html

Yet another reason to avoid 'smart' meters like the plague.