Will Debt Management help solve Utility Bill debts?
Are you having difficulties with utility bill debts? If so you risk the suppliers taking action against you. If you have fallen into arrears with your electricity or gas payments you may be under threat of your service being cut off. If you are unable to pay your Council Tax you might have to face bailiffs knocking on your door. Starting a Debt Management Plan (DMP) can be a good way of dealing with this type of problem.
- Find out how a Debt Management Plan can help if you have utility bill debts
- Do you still have to pay your ongoing utility bills in a DMP?
- What if you have old outstanding utility bills from a previous property?
- Is Debt Management always the best solution to resolve utility bill debts?
Can you include Utility Bill debts in a Debt Management Plan?
Utility bill debts are not normally included within a Debt Management Plan. Bills such as electricity, gas and Council Tax are all known as priority debts. You still need to continue to pay these if you start a DMP. However the Plan can still help you if you are struggling to make these payments.
Basically a DMP reduces the payments you make to your other unsecured debts. Things like your bank loans, credit cards and store cards. As a result the Plan will free up cash so that you can pay your utility bill payments on time in future.
DM4U Tip: If you have utility bill arrears you can include a provision for the repayment of these within your living expenses budget. This means that each month you pay your ongoing bills and an amount of the outstanding arrears. In this way the Plan will help you get back in control of your utility bills as well as your other debts.
Can a Debt Management Plan include old Utility Bill debts?
If you have started new accounts with different suppliers you may still have old utility bill debts which are outstanding. Perhaps you have moved house and the outstanding bills are from your previous address. You should not then just ignore these debts. The old providers can still take legal action against you to enforce repayment.
These old arrears can be included as debts directly in a Debt Management Plan. This is because the old provider cannot affect your ongoing utilities supply. As such you would normally include these debts in a Debt Management Plan in the same way as any other unsecured debt.
DM4U Tip: The only time it would not be possible to include utility debts in a DMP is if the provider has already issued a County Court Judgement (CCJ) against you. You are not allowed to reduce the amount you have to pay towards a CCJ without permission from the Court called a Variation Order.
Is a Debt Management Plan the best solution to resolve Utility Bill debts?
Your choice of debt solution is not normally based just on whether you have utility bill debts or not. The right option for you will depend on your wider financial circumstances. For example if you have no other debts then you may not need a Debt Management Plan at all. You can simply contact your service providers and agree to pay your arrears over time at a sensible rate.
If you have other unsecured debts as well then starting a Debt Management Plan could help you. It will reduce the payments you make towards your these. As a result cash will be freed up so you can pay all your utility bills on time from now on.
Even if you have other unsecured debts a DMP is not always the right option. You need to consider how long it will take you to become debt free if you use this type of plan. If it will take a long time because the amount you can afford to pay into it is relatively low each month then an alternative solution might be better. You may find that you are able to settle everything you owe including your utility bill debts in a much shorter time by using an alternative solution such as an Individual Voluntary Arrangement (IVA) or Bankruptcy.
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