Mobile phone debt advice

Q: What happens when my phone is paid off?

When you&#x2019;ve completely paid off your phone, you own it! You can then switch to a much cheaper SIM-only contract or upgrade. If your phone is in good working condition, we don&#x2019;t recommend upgrading as you&#x2019;ll be paying for yet another smartphone which is expensive.&#xA0; Make sure that you get in touch with your mobile phone provider once you&#x2019;ve paid off your handset. You should be able to haggle a much cheaper deal.

Q: Do I own my phone after the contract?

Yes, once you&#x2019;ve paid off your phone contract, you do own your phone. You now have the flexibility to choose from much cheaper SIM-only or pay-as-you-go tariffs.

Q: What mobile phone company does not require a credit check?

Some mobile phone companies do offer SIM-only contracts without having to carry out a credit check. We have an entire guide dedicated to the best mobile phone deals for bad credit. If you&#x2019;re looking to get a contract that includes a handset, most phone providers will carry out a credit check. If you have a history of paying your mobile phone bills late or accruing debt, you might not be offered the contract you want.

Q: Can I get an iPhone with no credit?

You might be able to get an iPhone contract without credit but it could be an expensive process. You might have to put down a huge deposit to get accepted. Speak you to your mobile provider first before immediately applying.

Q: Is it better to buy a phone outright or pay monthly?

It does work out cheaper to buy your phone outright as your monthly SIM-only payments will be much lower. However, many people can&#x2019;t afford to spend hundreds of pounds upfront and so need to pay for their phone monthly.&#xA0; For more information, we have a detailed guide on SIM-only vs phone contract plans.

Q: What happens when I cancel my mobile phone contract?

If you wish to cancel your mobile phone contract whilst there&#x2019;s still money owed, you&#x2019;ll have to repay this money in full. However, if you get in touch with your provider about cancelling, they might charge an exit fee but not charge you for the rest of the contract.&#xA0; If your mobile provider can&#x2019;t offer you an alternative, you can cancel the contract and lose the service. You&#x2019;ll then owe the rest of the money for the duration of the contract but you can spread it out over a longer period of time.

Q: Can you go to jail for not paying a phone bill?

Thankfully, being in debt is not a crime and you can&#x2019;t go to jail for not paying your phone bills, even if you refuse to.&#xA0; However, you still want to pay your mobile phone bills to avoid any of the following consequences: <ul><li>Disconnected phone service.</li><li>Low credit score.&#xA0;</li><li>County Court Judgement (CJJ).</li><li>Debt collectors sending bailiffs to your home.</li></ul>

Fiona Leake

Updated 4th February 2021

Mobile phone debt is more common than you might think and many people can find mobile debt collection a stressful experience. So, if you’re wondering what happens if you stop paying your mobile phone bills or if you’re struggling to pay, this guide is for you.

What is mobile phone debt?

Mobile phone debt occurs when you stop paying your phone bills. When you sign up to a mobile phone contract, you’re agreeing to pay for a monthly allowance of calls, texts and data. If you fail to pay, your account will go into arrears. If you haven’t bought your handset outright, you’ll also need to pay for that in your monthly bills.

Mobile phone contracts usually tie you into paying for a minimum of one year but the contracts can be as long as three years. Your financial situation can easily change within this timeframe. Which is why expensive mobile phone bills can become an issue for many, leading into debt.

What happens if you don’t pay your mobile phone contract?

Mobile phone bills are treated as a priority debt which means the consequences of not paying are stricter than with other bills. If you don’t pay mobile phone bills, your account will go into arrears and the debt will need to be paid as soon as possible. Otherwise, further action will be taken by your mobile phone provider.

The first step your mobile provider will take is to get in touch with you to remind you to pay your bills. If you continue to ignore these attempts, then your mobile account will default and your contract will be cancelled.

The mobile provider will then begin the debt collection process, this can include the following steps:

Disconnecting your mobile phone service.
Passing the debt onto a debt collection agency.
Issuing a County Court Judgement (CCJ).
Applying for your bankruptcy (if the debt exceeds £5,000).

Can you get a CCJ for mobile phone debt?

As one of the last resorts, mobile phone companies can issue a County Court Judgement (CCJ) for your debt.

A CCJ is a court order that will be raised against you if you fail to repay the money you owe. Credit reference agencies will see a CCJ as a negative, which will lower your credit score. This makes it very difficult to borrow any kind of money in the future.

Thankfully, this is one of the last resorts and you’ll have plenty of time to prevent this from happening, we will explain how later in this guide.

Do phone companies send bailiffs?

Phone companies do get debt collection agencies involved quickly when you owe them money. However, bailiffs won’t suddenly start appearing at your address to take away your belongings.

You’ll be given prior notice and multiple opportunities to pay before bailiffs are called.

Does mobile phone debt go away?

Unfortunately, your mobile phone debt won’t just disappear until your phone provider gets the money owed. This means the last resort will be bailiffs sent to your property to recover the money owed via your possessions.

If this doesn’t work, your mobile provider could file for your bankruptcy if the debt is large enough.

You should never ignore debts with the hope that they will disappear. The best course of action is to contact your provider to discuss the solution.

Will mobile phone debt damage my credit rating?

If your mobile phone debt doesn’t get paid, your phone provider will eventually contact the court to issue a County Court Judgement (CCJ). Most credit card providers, mortgages and personal loans won’t allow you to borrow money if you’ve had a CCJ in the past six years.

This is why it’s so important to tackle your mobile phone debt quickly, we will share how to below.

How to deal with mobile phone debt

Debt can be scary and seemingly impossible to get rid of. However, there are steps you can take to tackle your mobile phone debt and have your peace of mind return.

Step 1: Speak to your mobile provider

Many mobile providers have support in place for customers in debt who are struggling to pay their bills. This support can include the following:

Repayment plan - your provider might agree to an affordable repayment plan to help cut down your debt.
Bill date - you might be able to change the date of your bill to a more affordable time.
Ending contract - you might be able to switch from your current ‘pay monthly’ contract onto pay-as-you-go. You can then pay off your debt without more monthly payments being added on top.
Switching tariffs - to help with your debt, you might be able to switch to a cheaper pay monthly tariff.
Payment delay - to prevent further debt mounting up, your mobile provider might agree to delay any further bills until an agreed date.

Step 2: Seek free debt advice

Multiple companies offer free debt advice, the Money Advice Service has them listed here.

These companies can help advise you on what to do about your debt and create a debt management plan to make repaying much less intimidating.

Step 3: Pay what you can afford

When repaying your mobile phone debt, only pay back what you can afford to. Otherwise, you could end up in more debt than you were before if you have to borrow money in order to repay.

Seek help from debt management companies and your mobile provider. If you agree to repay affordable amounts each month, you should avoid any involvement of debt collectors.

Step 4: Cap your monthly allowances

If you’re struggling to pay your mobile phone bills because each month there are surprise extra charges, you might want to speak to your provider about capping your monthly allowance of calls, texts and data.

This way, you won’t ever be able to spend more than the agreed monthly allowance. You’ll be able to budget better and avoid any future debt.

Can I dispute unfair mobile phone debt?

If you see unexpected charges on your mobile phone bill that you believe are incorrect, speak to your mobile phone provider. You can ask them to explain the unexpected charges. If the charges are wrong, only pay for what you owe and ask your provider to reduce the bill.

If the phone provider doesn’t resolve the problem in 8 weeks, you can take it further and get in touch with communications regulator, Ofcom. You can make a complaint here.

Disputing Phone-paid services

Phone-paid services will also appear on your mobile phone bill. These services include things like voting in TV shows, donating to charity, entering competitions and more. If you believe you have been overcharged for a phone-paid service, you’ll have to get in touch with the company that runs the service. You can get contact details from the Service checker on the Phone-paid Services Authority's website.

If you still believe that you’ve been charged incorrectly, you can report it to the Phone-paid Services Authority. You can either phone them on 0300 303 0020 or fill in the online form.

How to avoid mobile phone debt

To avoid getting into mobile phone debt, you need to find the right contract for you. Here are some key things to consider before and during your mobile phone contract:

1. Find the best phone contract for you

Ask the following questions to help choose a mobile phone contract that is best for your circumstances:

Do I already have a mobile phone or do I need a new one?
How many calls do I make a month?
What types of calls do I make? (mobiles, landlines or premium rate services).
How much mobile internet data do I use?
How many text messages do I send?
How much money can I afford to spend on my phone each month?

Bill monitor analyses your usage and recommends what monthly allowances you’ll need from a mobile phone contract.

Ofcom also has a price comparison page to help you find the best deal.

2. Consider the length of your contract

Pay monthly contracts aren’t short and usually last between one to three years. Only commit to a year if you aren’t sure whether you’ll be able to pay for longer. For example, you might be on a year’s contract job with a company, therefore, you might not be able to afford an expensive mobile phone bill for two years.

Pick a contract length that works for you.

3. Pick an affordable phone

If you’ve picked a contract that includes the cost of a new mobile phone, make sure you can afford it! Don’t pick the newest, most expensive handset if it’ll be a struggle to pay for each month or you could end up in debt.

Picking a slightly older, cheaper phone will have a huge impact on how much your monthly bills cost.

4. Consider SIM-only

SIM-only contracts only include a monthly allowance of calls, texts and data. This means you won’t get a phone with the contract and so won’t have to pay the additional cost of a handset on top of your monthly allowance.

This is a great way to make your bills cheaper. SIM-only contracts are also more flexible and can be as short as one month.

5. Don’t be tempted to upgrade

Once you’ve reached the end of your contract and you’ve paid off the cost of your smartphone, the mobile provider will offer you the option to upgrade. However, if your current handset is working perfectly fine, don’t be tempted to tie yourself into another long, expensive contract.

Yes, it’s tempting to have the latest handset but it will cost you a lot more, meaning you could be more likely to end up in debt.

For more information and advice, check out our in-depth guide on mobile phone contracts.

How can I cut my mobile phone bill?

If you want to reduce your mobile phone bills, one of the best ways to achieve this is by haggling. If you’re nearing the end of your mobile contract, you can contact your provider and threaten to leave if they don’t make it cheaper.

You can also cap your allowance to prevent overspending.

Read our in-depth guide on cutting mobile phone bills for more ideas.