Can I switch suppliers if I’m in debt?

Can you switch energy suppliers if you owe money?

Falling behind on energy bills is a common worry for many households. When prices change or winter approaches, you might want to look for a cheaper tariff or a better supplier. If you owe money to your current energy supplier, you might assume you are stuck with them until the balance is completely paid off. This is not always true. You can often still switch, but the exact rules depend on how you pay for your energy and how much you owe.

Energy regulator Ofgem sets clear rules about when a supplier can and cannot block you from leaving. These rules are designed to stop companies trapping customers unfairly, while also ensuring that debts are eventually paid. To understand your options, you first need to know the difference between normal account debit and actual energy arrears, and then look at the specific rules for your meter type.

Understanding the difference between debit and debt

Before you try to switch, it helps to understand how energy companies view the money you owe. There is a big difference between being in debit on a normal payment plan and being in formal arrears.

If you pay a fixed Direct Debit, your account balance will go up and down throughout the year. Being a few hundred pounds in debit during February is normal and does not count as being in arrears. If you choose to switch while in this normal debit state, the supplier will not block you. They will simply calculate your final usage, add your debit balance, and send you a final bill. You then have to pay this final bill, usually within 14 to 28 days.

However, if you have received a bill and failed to pay it by the due date, or if you have cancelled your Direct Debit and stopped paying, you are in arrears. This is the type of debt that triggers Ofgem's specific switching rules.

The rules for credit and Direct Debit customers

If you pay by Direct Debit, or if you pay a bill every month or quarter after you have used the energy, you have a standard credit meter. For these meters, the ability to switch depends entirely on how old your debt is. This is known as the 28-day rule.

If your debt is less than 28 days old

If you have received a bill and you owe money, but the bill was issued less than 28 days ago, your current supplier cannot stop you from switching. You have the right to move to a new company. The money you owe will simply be rolled into your final bill. Once the switch completes, the old supplier will send you this final demand, and you will need to pay it to settle the account.

If your debt is more than 28 days old

If you have owed the money for more than 28 days, your current supplier has the right to block the switch. If you try to sign up with a new supplier, the old supplier will send a message through the energy industry systems to stop the transfer. They will then write to you or email you to explain that the switch has been cancelled because of your outstanding balance.

To move forward, you must address the arrears. You can either pay the debt off in one lump sum or agree to a repayment plan. However, even if you set up a repayment plan, you usually cannot switch to a new supplier until the balance is completely cleared. You are effectively tied to your current supplier until the debt is gone.

The rules for prepayment meter customers

The rules are different if you use a prepayment meter (where you top up a key, card, or app before you use energy). Ofgem recognises that prepayment customers are often more vulnerable to high costs, so the rules make it easier to switch and find a cheaper rate, even if you have older debts.

Under a system called the Debt Assignment Protocol, you can switch to a new supplier as long as you owe £500 or less per fuel. This means you can transfer up to £500 of gas debt and up to £500 of electricity debt. If your debt is below this limit, your current supplier cannot block the switch.

When you switch, the debt moves with you to the new supplier. You do not have to pay it off as a lump sum. Instead, the new supplier will set your meter to collect a small amount towards the debt every time you top up, exactly as your old supplier did. They must ensure the weekly repayment rate is affordable for you.

There is a practical trade-off to keep in mind. While you can take your debt to a new prepayment supplier, you generally cannot switch from a prepayment meter to a standard credit meter while you are in debt. Tariff prices vary, and prepayment customers currently pay the lowest price-cap rates. Suppliers may also require a credit check before they will remove a prepayment meter or switch it to credit mode.^[1]

Why switching and fixing matters right now

Understanding your right to switch is especially important when prices are changing. The energy price cap limits the maximum amount suppliers can charge for each unit of gas and electricity. If you are in debt and stuck on a standard variable tariff, you are directly affected by these cap changes.

The current price cap for a typical household paying by Direct Debit is £1,663 a year, which runs until 30 September 2026. However, Ofgem has confirmed that from 1 October to 31 December 2026, the cap will rise to £1,723. This is an annualised increase of roughly 4%, adding around £60 a year to a typical bill.

From 1 October, the average Direct Debit unit rates across Great Britain will be 26.32p per kWh for electricity (with a 54.83p daily standing charge) and 7.97p per kWh for gas (with a 29.68p daily standing charge). The government is cutting VAT on electricity to 0% from 1 October 2026 until 31 March 2027, which is reflected in these upcoming electricity figures. Gas will continue to include the standard 5% VAT.

Because prices are rising in October, many households look to switch to a fixed tariff to lock in a lower rate for winter. If you have credit meter arrears older than 28 days, you will not be able to switch to a cheaper fixed deal until you agree a way to clear the debt. This means your winter bills could grow faster if you remain on the standard variable rate.

How to switch if you owe money

If you want to change suppliers and you know you have an outstanding balance, the process involves a few extra checks compared to a standard switch. Follow these steps to make sure the transfer goes smoothly.

What to do if your supplier blocks your switch

If you try to switch with a credit meter and your debt is older than 28 days, your current supplier will likely block the transfer. If this happens, your priority is to contact them and set up a repayment plan. Ignoring the problem will only lead to further debt collection action and keep you trapped on their standard tariff.

Energy companies are legally required by Ofgem to help customers who are struggling to pay. They cannot simply demand money you do not have. When you contact them, they must look at your financial situation, including your income and outgoings, and offer a repayment plan that you can genuinely afford. This might mean paying off the debt in very small weekly or monthly instalments.

If you receive certain benefits, you might be eligible for the Fuel Direct scheme. This allows the supplier to take a fixed, affordable amount directly from your benefits before they are paid to you, covering both your current usage and a small amount towards the debt. Ask your supplier or the Jobcentre if this is an option for you.

Many of the larger suppliers also run hardship funds or grant schemes. These are designed to help customers who are in deep financial trouble and cannot see a way to clear their arrears. In some cases, these funds can write off a portion of the debt, freeing you up to switch once the balance is cleared.

Supplier mistakes and special cases

There are some situations where you are allowed to switch even if your account shows a large debt. The most common is when the debt is the result of a supplier error.

If all of the outstanding charges are genuinely disputed — for example, because the supplier has used incorrect estimated readings, billed you for the wrong meter, or failed to fix a faulty meter — it must not block your switch while it investigates. If part of the balance is undisputed, it may still be able to object on the basis of that amount. You will still have to pay whatever the correct balance turns out to be once the dispute is settled.^[1]

Another special case is if you rent your home. Some tenancy agreements include a clause asking you to stay with a preferred energy supplier. However, if you are the one named on the bill and paying the energy company directly, you have the legal right to switch suppliers. Your landlord cannot stop you, and being in debt does not change your legal right to choose your supplier, provided you follow the normal Ofgem debt rules.

Finally, if your energy supplier goes out of business, Ofgem will automatically move your account to a new company, known as the Supplier of Last Resort. If you owed money to the old, failed supplier, the debt does not disappear. Whether you repay the new supplier or the old supplier’s administrator depends on the arrangements they make.^[2]

Summary