£400 DISCOUNT USED FOR DEBT

SammiJxx

I currently have a large debt (£1000) with British Gas for my electric - due to previously estimated bills. I have set up a monthly payment plan which is £201 usage & £24 for my debt, repaid over 5 years.
I have a pre-pay gas meter but currently, hardly using any gas as I am not using my heating and I boil a large pan of water for washing my dishes, etc.
My worry is that when the winter comes, I will be using over £100 on gas plus paying £225 per month for my electric.
I wasn't sure how the £400 would be distributed so I contacted British Gas via the online chat.
They have told me that the £400 will just be used against my debt so technically I will be worse off as I will still need to pay the agreed amount each month plus paying for my gas usage.

Are they allowed to do this ?

I have been told to ring up to set up a new payment plan as my debt will be lower but as it has been spread over 5 years, I estimate that my payments will only be about £7 less per month

Mstty

Edit wrong info

SammiJxx

I don't pay by Direct debit - I have a payment card that I take to a Payzone & pay cash each month.
I presumed I would receive a £66 or £67 voucher as stated but they have told me that the £400 will just get deducted from my debt.

I don't think this is allowed but can't find any advice

Mstty

Sorry I speed read.

Interesting but how will you be worse off having less debt?

pochase

Post was deleted

I have not seen anything that would hint that they are allowed to use the £67 against a debt in the government information, and what has been posted about the BG information email also had no information that this is possible.

You have a fixed agreement with BG that you will pay £24 per month, I don't think they can just say there is another £67 we are just using it against the debt. Also the grant is for energy use, not to pay of debt - at least I don't see anything in the documents.

But why are you saying you would be worse off than without the grant? You would have to pay exactly the same as you would have to without the grant, but you would have £400 less debt.

Edit
OP has now said he is on prepaid.

Usually the debt collection on prepaid works the way that a percentage of a top up will be used.

A fixed monthly amount is at least for me new. How can you have a £201 usage on prepaid? Prepaid works the way that you top up whatever you need and not a monthly amount.

Are the saying they will not send you the vouchers?

pochase

Mstty said:

Sorry I speed read.

Interesting but how will you be worse off having less debt?

There was nothing in the initial post that electricity is on prepaid, only gas prepaid was mentioned.

SammiJxx

If I am currently paying £225 per month and they give me £66 / £67 voucher, then I will only be paying £159 / £158 per month. 

The debt has been spread over 5 years at £24 per month, with £400 deducted, over 5 years that is only £6.66 less per month.

SammiJxx

Hope that makes more sense

pochase

SammiJxx said:

If I am currently paying £225 per month and they give me £66 / £67 voucher, then I will only be paying £159 / £158 per month. 

The debt has been spread over 5 years at £24 per month, with £400 deducted, over 5 years that is only £6.66 less per month.

60 x £6.66 is £400. SO exactly the same £400. Why are you worse of than not getting the £400 at all.

So you pay less for 5 years, Or you pay the same and are done 2 years early.

Have you agreed to top up every month by £225 or how does that work? If you use less what happens?

Mstty

You could look at it this way if they do enforce this going off your debt.

Oct-March you will reduce your debt by £400 plus 6 lots of £24 so you will have reduced your £1000 debt by £544!!

Then you can renegotiate the remaining £456

SammiJxx

I will be worse off as at the moment I am not spending any money on gas - this will rise to over £100 per month in winter.

That means I will be paying out over £325 per month

If the give me the £66 / £67 voucher as I thought - I will be paying out £259 / £258 per month

'IF' they deduct it from my debt an adjust my repayment of the debt, I will be paying about £318 per month 

As I believe, the payments are to help with energy usage over winter - not to clear / reduce a current debt.