What are the options for repaying my energy debt?

December 17, 2017

If you’ve fallen into debt with your energy supplier, it’s advisable to contact them as soon as possible. They have an obligation to explain the ways in which you can repay, and should be able to offer an affordable payment plan.

To this end, it’s a good idea to work out how much you can afford to repay before you make contact. A detailed budget incorporating all incomings and outgoings, including annual spending such as car servicing and family birthdays, will allow you to see exactly how much you can afford after all essential living costs have been deducted.

Repaying via a new instalment plan

A new payment plan could be based on weekly, fortnightly, or monthly payments, and should combine the arrears with your current usage. The energy company will assess your consumption based on previous use, and factor this into the plan – providing regular meter readings helps to make their assessment more accurate.

Prepaid energy meters

If you’re unable to agree a repayment plan, or fall behind with an existing plan, your energy supplier may decide to install a prepayment meter. The meter is topped up using a smart card, token or key, with a proportion of your debt being repaid each time you top up.

It can be an effective way to repay energy debt as you’re able to see how much gas and electricity you’re using, and adjust consumption accordingly. The downside is that you won’t have access to gas and electricity if you can’t afford to top up the meter.

Social schemes

Fuel Direct

‘Third party deduction’ schemes can remove some of the pressure when you’re struggling with energy debt. If you’re in receipt of certain benefits, the Fuel Direct scheme takes energy payments directly from the benefit payments, and includes a proportion of the arrears.

Although this leaves you with less cash available during the month, it can be an effective way to clear gas and electricity arrears. Other schemes include Cold Weather Payments, Winter Fuel Payments, and the Warm Home Discount Scheme.

Formal debt solutions

Some debt procedures are designed to help you repay unsecured debt such as overdrafts, personal loans and credit cards, rather than priority debts like your energy arrears. Having said that, a debt management plan (DMP) or individual voluntary arrangement (IVA) may still be a good option to reduce monthly outgoings in general, and help you deal more effectively with your priority debts.

As far as an IVA is concerned, you may be able to include gas and electricity arrears. If so, any debt remaining at the end of the term, typically five or six years, is written off. This is in contrast to the Debt Management Plan where you repay your debts in total.

A number of potential options exist to repay energy debt, but initially, it’s important to contact your energy supplier. For more information on different ways to deal with energy arrears, call one of the team at Northern Ireland Debt Solutions. We’ll advise you on your options, assist with negotiations if necessary, and ensure you choose the right solution according to your overall debt position.

Lawrence O'Hara

Insolvency Adviser

Tel: 028 2132 6269

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