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Mobile phone debt: Can't afford to pay your bill?

When you sign up for a mobile phone contract you agree to a minimum contract length, usually 12, 18, or 24 months. If your situation changes during the duration of the mobile phone contract or you receive an unexpected bill, you might not be able to afford to pay your mobile phone debt.

If your income drops during the contract term, or your living costs go up, your mobile phone bill can become unaffordable. You might also struggle because of a one-off bill that you weren’t expecting, or that the phone contract you signed wasn’t as affordable as you thought, or included hidden ‘extras’.

What happens if I don't pay my mobile phone bill?

If you don’t pay your mobile phone contract, your account will go into arrears. Your mobile provider could cut your phone off so you’re unable to make or receive calls.

If you don’t take steps to deal with the debt, your account will default and the contract will be cancelled. The mobile provider can then take action to recover the outstanding bill, following the normal debt collection process.

Mobile phone bill arrears should be treated as a priority debt as mobile phone companies can take the following steps to recover the money owed to them:

  • Disconnecting the mobile phone
  • Passing on the debt to a third party debt collection agency
  • Issuing a County Court judgment
  • Applying for your bankruptcy, if the amount exceeds £5,000 (applies to England, Wales and Northern Ireland only) 

Mobile phones and the Consumer Credit Act

Some mobile phone companies ask their customers to sign two agreements. It’s important to understand which is which, as it’ll affect how the phone company will deal with your debt.

  1. If you’ve signed a contract covering the minutes, text and data usage any debt is not covered by the Consumer Credit Act
  2. If you’ve signed a contract for the sale or loan of the device this is regulated by the Consumer Credit Act

Find out more about the your rights and the Consumer Credit Act.

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I can’t pay my mobile phone bill, what can I do?

Going over your inclusive allowance for calls, texts or data or using premium rate services and your phone abroad can lead to unexpected bills that you may not be able to afford. You may also have previously missed payments which you’d agreed to catch up with.

Speak to your network provider about the arrears: They may be able to spread the repayments over a longer amount of time.

Review your allowances or tariff: Make sure your contract covers your usage for texting, calling and mobile data downloads. Sometimes the network provider can cap your allowances so that you don’t go over your usage limits, helping you lower future bills.

Consider switching your mobile phone contract to another provider: This is usually only an option if your current contract has ended. You may be able to get a cheaper deal, such as SIM-only contract, with a different tariff or provider. If the contract hasn’t ended you may be charged cancellation fees to cover the remainder of the contract.

You can see a list of price comparison sites which have been accredited by Ofcom on the Ofcom website.

How can I pay less for my mobile phone contract?

There are a number of ways to spend less on your mobile phone bill, which can help when you’re dealing with arrears.

  • Tell your mobile phone provider you’re going to leave because you can get a better deal elsewhere. This invites them to negotiate with you
  • Cancel any unnecessary mobile contracts or allowances you’re not using
  • Use comparison websites to search for the best deals
  • Use free services wherever possible, such as Skype and WhatsApp (making allowance for the use of data or wifi)
  • If you’re regularly going over your data limit, use wifi (including free wifi in public spaces) to use services where data is downloaded

Mobile phone contracts can seem like an easy way to get the latest phone and spread the costs, but you can end up paying more in the long term. There are alternatives that could work out cheaper, and ways to save money on your current contract to help you prevent falling into debt in the future.

Our MoneyAware blog has more helpful tips for saving money on your mobile.

SIM only deals: These offer a package of minutes, texts and mobile data and are similar to traditional mobile contracts. The difference is that you don’t get a phone included in the contract. This can work out cheaper as you’re not paying a high cost for a phone, and you can buy one separately or use one you already have. There’s also usually a lower minimum contract term such as 30 days, so you can cancel more easily if you want to.

Pay-as-you-go: This lets you buy credit in advance and only pay for what you use. There are no long contracts to worry about and you can switch providers at any time. You’ll need to buy or use a phone separately as you’re only paying for the minutes, texts and data you use.

I don’t think my mobile phone bill is fair, what can I do?

If you think you’ve been charged incorrectly, speak to your mobile phone provider. Ask them to check your tariff and explain about any extra charges that have been included.

Mobile phone companies are governed by the communications watchdog, Ofcom. If your complaint isn’t resolved by speaking to your mobile phone provider you can send a written complaint to them. It’s worth including evidence to back up your reason for disputing the bill.

If your complaint isn’t resolved, you can refer the phone company to Ofcom using the guidance on their website.

What if the debt has been sold on to a debt collection agency?

It’s common for a mobile phone debt to be sold on to a debt collection agency once the account has defaulted.

They’ll contact you to arrange a payment, don’t ignore their letters. Read our guide to dealing with debt collectors.

If a debt collection agency is chasing you for payment of a bill you’ve raised as a complaint with the mobile phone provider, tell them you’re in dispute over the amount. Then refer them back to the mobile phone provider.

If you’re unhappy with the way the debt collection agency is dealing with you, you can make a complaint to Ofcom. In October 2017 Ofcom ruled that mobile companies will be required to make sure that their debt collection policies are “proportionate and not unduly discriminatory”.

What happens when I cancel my mobile phone contract?

If you want to cancel a contract and there’s still something left to pay, you’ll be asked to repay this in full.

When you contact your mobile provider to cancel the contract you may have to do this in writing. There may be a charge to cancel early, but this could work out cheaper than making payments for the rest of the contract.

If your mobile provider can’t offer you any alternatives or reductions you should only pay as much as you can afford. You’ll lose the use of the service and still owe the payments for the rest of the contract term, but you may be able to pay this off over a longer term once the service is cancelled.

Help and advice with debts

If you’re worried about your phone contract, arrears or debts then it’s important to get impartial advice. Use our online Debt Remedy tool to get an assessment of your situation and recommendations on how best to deal with your debt problem.

If you'd rather speak to us about your situation, call our free helpline to talk to one of our expert advisors. Calls are free from landlines and all mobiles.

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