Struggling to pay bills? Here’s how to ask your provider for help

How do you know when you’re struggling financially? Many people are asking themselves this question as the cost of living crisis continues to unfold around them.

Disclaimer: since this article was published, the government announced plans to limit the average households energy bills to £2,500 a year from October. While far lower than the price cap originally intended to come into effect at this time, it still marks a 27% increase from current prices. Find out more about the upcoming energy price guarantee.

In March – even before energy prices began to hit extraordinary levels with the 54% rise in the price cap – about a quarter of the population admitted that they were finding it difficult, or very difficult, to pay their bills, government figures showed.

This covered everything from broadband bills to water, council tax and car finance.

Understandably, much of the government financial support available in these scenarios is aimed at those in the greatest need – people who are in receipt of benefits.

But I’ve been contacted by a wide range of people from different backgrounds, ages and incomes – all of whom are deeply concerned about whether they will be able to keep up with rising costs. Many of them don’t believe they are eligible for help.

The fact of the matter is this: It is possible to have a nice house and a good job and still not be able to afford essential expenses.

If your outgoings are greater than your incomings, or if the money you have left over after paying the bills is limited, or not enough to cover you in an emergency, you are in financial difficulties.

So if you are in this group, what kind of help can you expect? And how do you get the providers of services you are struggling to afford to listen to you?

The definition of ‘financially struggling’

Regulators, ombudsman services and consumer organisations generally agree that this umbrella term includes people who can’t afford to pay their bills, either temporarily or long term.

If you are in this position and get in contact with your provider to alert it to your problems, you may find you are offered help with your bills. This will be tailored to your own individual circumstances.

For example, say you’re between jobs and expecting your cashflow to be affected for a few months; in this situation, you could set up a payment plan where you spread reduced repayments over a longer period.

If your problems are more long-term, the proposals you should be offered will need to be geared towards ensuring that your debts don’t increase significantly but also that payments are set at manageable levels.

When to seek help and whether it affects your credit file

Getting hold of a business can be a challenge these days. However, when you do manage to make contact, then as soon as you say you are experiencing financial difficulties, the energy, water, broadband, entertainment or loan provider should swing into action.

Before you pick up the phone, take a little time to work out a quick budget. This should only take 15 minutes or so. In order to help, companies are allowed to ask for some details about your finances.

Make a basic list of your regular outgoings versus the money that you have coming in each month. This will allow the business to understand the level of support you need.

Once you’ve discussed the proposals with the firm, ask them to confirm in writing what they’re suggesting. This gives you time to think about the offer, see what difference it will make and find out about any repercussions further down the line (like damaged credit reference files or extra interest after payment holidays).

All of the main regulated industries – financial services, energy, water and telecommunications – have said that companies should tailor solutions that are suitable for the specific circumstances of their customers.

We have more tips on how to manage your debts.

What kind of help might I be offered?

Most business sectors have remarkably similar rules and guidance from their regulators when it comes to supporting vulnerable people or others who are struggling financially.

These options can include:

• Coming up with realistic payment plans that match the customer’s personal circumstances
• Giving people payment holidays or suspending payments to allow them some breathing space
• Suspending debt interest and charges and refunding excessive charges that have already been applied
• Providing information on the cheapest rates and tariffs
• Regularly checking how their customers in financial difficulties are managing with their plans and proactively keeping in contact
• Avoiding debt collection services or cutting off supplies wherever possible

Energy bills

Energy regulator Ofgem has listed all the help you could potentially receive from energy firms, along with information about schemes and grants that are available.

Companies must be proactive and contact customers who fall behind on their payments. They must ensure any debt management processes are conducted in a fair and reasonable way.

Water bills

The Consumer Council for Water gives details of the different support available for those struggling with water bills. Ofwat, the regulator, has a list of support for people struggling, here.

Mortgages

The Financial Conduct Authority told me that lenders must take into account individual circumstances. This may include tailored support and payment plans where needed.

Broadband bills

Where people are falling behind on broadband bills, industry regulator Ofcom says suppliers should take all action to find a solution – with disconnecting the service viewed as a last resort.

The companies must offer payment holidays and repayment plans, offer social tariffs or cheaper plans where possible and signpost customers to organisations or charities if they are severely struggling. Find out more, here.

There’s also plenty more on cost of living grants in our guide.

Can they cancel my debt?

A moment of realism here. While companies can (and sometimes do) agree not to chase indebted consumers for some of the money that they owe, this isn’t an obligation.

Nor do any of the guidelines from the different business sectors address the wider implications of the deeply concerning costs that we as a nation are facing in the coming months.

If you have not received the £326 cost of living payment, find out whether it means you don’t qualify on not.

Is there someone that can manage my debt for me?

If you or anyone you know are facing long-term financial problems or are feeling overwhelmed by debt, then I’d strongly recommend speaking to the free debt charity StepChange.

The charity can help by putting together a practical, realistic debt management plan. They will contact your creditors on your behalf and negotiate payments you can afford. You pay an agreed lump sum to the charity each month and they do the rest.

Like any debt plan, it’s not easy, but it’s a solution. Never pay for a debt management service – there are free options out there.

We have more information on getting debt help and how to contact a debt adviser.

Can my service provider refuse to help me?

The bottom line is that customers have to be treated ‘fairly’.

If you don’t feel that the business is offering you any practical help with your debts, then make a formal complaint and ask them to suspend interest and charges while the matter is looked in to.

Many industries have free ombudsman and dispute-resolution schemes that you can go to if you are unhappy with how a company is handling your complaint. The most notable of these is the Financial Ombudsman Service.