Arrears

Credit

Consumer credit services are subject to the regulation of the Financial Conduct Authority (FCA), the Financial Ombudsman Service and the law relating to consumer credit, which means they must operate in certain ways when dealing with consumers.

First of all, the creditor must provide certain information upfront, so you would be advised to familiarise yourself with the terms of your credit agreement, and any correspondence you have received since then. This will tell you the procedures in the event that you are struggling to make payments.

If you cannot afford or fail to make the required payment it is important to get in touch with the creditor quickly. They have to notify you about missed payments, but the sooner you get in touch with them the less likely it will be that your account will default. Creditors are often willing to agree a more manageable repayment plan, or offer a payment holiday for a short period. This may also help to avoid a negative impact on your credit rating.

However, it is important to remember that there are limits to how a creditor can proceed when trying to get you to make payments. Neither the creditor nor a debt collection agency can force you to make payment or surrender goods without a court judgement, and this should be a last resort. The best thing is to engage with the creditor and try to come to an arrangement.

Get in touch with our debt advice service if you need help negotiating with creditors. If you have a lot of debt, your adviser will be able to help you weigh up the different options, including a range of formal and informal agreements you could make with creditors.

Energy

Energy arrears are priority debts due to the potential risk of disconnection. As such, you would be advised to seek the support of a qualified debt adviser to figure out your ability to pay and to help you negotiate with the provider.

All suppliers have specific codes of practice with respect to billing and debt, which are underpinned by the general principles set out by the Utility Regulator:

• Supplier Codes of Practice: Payment of Bills

This emphasises the importance of communicating with your supplier about any difficulties you are experiencing paying your bill, and that the supplier should work with you and any organisations supporting you to avoid disconnection.

In addition, all suppliers must maintain a register of their customers who are of pensionable age, disabled or chronically sick, and as part of the relevant code of practice should avoid disconnection during winter months (October to March).

If you are having difficulty dealing with your supplier, you can get advice from the Consumer Council about making a complaint. The Consumer Council’s website provides helpful consumer information in relation to accessing an energy supply:

• Rights & Advice: Energy

Prepayment Meters

In extreme cases where no payment plan has been agreed the supplier can install a prepayment meter without your consent, but this should be a last resort. If the supplier is trying to do this without your consent, contact them to find out why, and seek independent advice:

Electricity

• Budget
• Click Energy
• Electric Ireland
• Power NI
• SSE Airtricity

Gas

• Firmus
• SSE Airtricity

If you run out of credit on your meter you will be provided with an emergency credit. If this happens at certain hours of the day your supply will be maintained until a more social time to allow you to top up. However, this usage will be deducted from your next top-up. Check your supplier’s website for their rules on emergency and ‘friendly’ credits.

Arrears on a prepayment meter are unusual, but might apply if you have carried over debt from a billed account, or where emergency credit is still outstanding. Suppliers can recoup this from any future top-ups you make, but you can contact them to ask them to take a smaller percentage if this is causing hardship.

Third-Party Deductions

If you receive certain social security benefits, such as Universal Credit, your supplier can approach the Department for Communities to ask them to deduct money from your payments to cover arrears on your bill. How much can be deducted and whether you need to give consent varies depending on your circumstances. Contact the benefit paying office if this is causing hardship, and get in touch on 0800 915 4604 or with your local advice centre for independent advice.

Mortgages

Your mortgage will always be a priority payment, meaning you should maintain these payments before paying other debts like loans and credit cards. If you are unable to make a payment contact your mortgage provider as soon as possible to try to come to an agreement to repay the arrears. There are a number of options that might be open to you.

If you are unable to negotiate repayment of the arrears with your provider, they will write to you to warn they will be commencing court action. Do not ignore any letters.  If this happens to you, get in touch immediately for advice.

More information about mortgage arrears is available in our Money Talks guide on Housing Related Debts.

Rent

If you miss payments on your rent and fall into arrears, your landlord can take legal proceedings to evict you from the property. Your landlord is under no obligation to negotiate with you. However, if you contact them they could be sympathetic, and may be open to agreeing a payment plan. If you will be paying late or missing a payment, then you should make your landlord aware as soon as possible. This advanced notice will allow your landlord to take steps to minimise any affect the missed payment will have for them.

If you cannot afford to pay your rent in full, you should offer as much as you can towards the rent to show your landlord you intend to deal with the situation. This will also keep the rent arrears to a minimum. If the landlord refuses the offer keep this money aside, as if there are court proceedings it can help your case.

Recent changes to the law in Northern Ireland mean that landlords must give tenants either 4, 8 or 12 weeks’ notice to quit a rental property. How long your notice period is will depend on how long you have been living in the property. You can check the rules that apply to you at Housing Advice NI.

More information about rent arrears is available in our Money Talks guide on Housing Related Debts.

Utilities

Apart from energy bills, there are a number of other household bills that need to be treated as a priority if you fall into arrears. How important these are varies depending on the rules that apply, but the most important are your TV licence and phone contract.

TV Licence

Watching live TV or using BBC iPlayer without a TV licence is a criminal offence. You could be fined up to £1,000 and if you fail to pay the fine the court could authorise a bailiff to enforce collection, including by taking money from your benefits or wages, and even resulting in imprisonment in extreme cases. For that reason, it is important to treat this as a priority debt.

Mobile

Mobile phone contracts are a common source of debt because they usually have fixed monthly costs that have to be met whatever your actual usage. It can also be easy to incur additional charges for accessing extra services or if you exceed monthly usage caps.

If you fall behind on your bills the provider could disconnect your service and seek recovery through standard debt collection procedures, including passing the debt to a collection agency or seeking a court judgement. As a consequence, it is important to treat arrears as a priority and try to make an arrangement with the provider to pay back the debt. You could also talk to the provider about changing your tariff to make it more affordable, although this will not always be possible depending on the contract that is in place.

As with energy suppliers, the regulator, Ofcom, has developed guidance to encourage mobile providers to support their customers in this situation, including giving extra consideration to those who are vulnerable and offering social tariffs:

• Vulnerable people
• Social tariffs: Cheaper broadband and phone packages