Pre-paid gas and electricity meters have been slammed after reports of bills exceeding £60 per week resulting in Dickensian-type living conditions.
The study by Transact (a consortium of debt advice agencies, credit unions and housing associations) claimed that its members had reported high levels of financial hardship brought about by the unreasonable energy charges.
The consortium found that pre-payment customers, who are often from the poorest households, are charged an average of £215 a year more for their energy bills than a customer paying by direct debit.
This additional pressure placed on these vulnerable customers has forced many to endlessly pour money into their meters in an effort to stay warm, whilst others have resorted to switch heating and water off – choosing instead to wrap-up warm in additional clothing or bedding.
Debt advice organisations have reported that disposable incomes have been squeezed, as household bills have increased, often forcing many to turn to credit cards, overdrafts and other credit debt just to make ends meet.
This can have disastrous financial consequences though in the long-run, as when the credit runs dry a huge amount of credit will have been amassed.
Impartial debt advice from a reputable organisation could help to avoid this. Their debt advice should explain in more detail the different options available to alleviate the issue.
Debt help solutions include Debt Management Plans (DMPs), IVAs (Individual Voluntary Arrangements) and Trust Deeds amongst others.
A debt management plan is a possible means of help that gathers all unsecured balances (credit cards, store cards, overdrafts, loans etc) into one easily affordable payment. Debt management is also a flexible debt help solution, as client’s payments can be altered to suit their changing circumstances.
An IVA is a more formal solution for dealing with debt problems and requires the services of a qualified Insolvency Practitioner. Following their debt advice, they may recommend an IVA which requires the Insolvency Practitioner to draft a legally binding contract with creditors. This ensures that client’s are protected from creditors changing their payment demands, once the IVA has been agreed.
Reputable debt advice organisations include Chiltern Debt Management, The Debt People and Hamilton Locke. Their debt advice is free and their debt help solutions are tailored to the individual.
A spokesperson for Transact pointed out that rarely in other industries are customers who make advanced payments penalised for their actions – as is the case with energy pre-payment meters.