What happens if you miss a bill?

Almost half (44%) of us say that paying energy bills is difficult at the moment, and 3% of us are already behind on them.

Meanwhile, more than a quarter (28%) say it’s difficult to pay their mortgage or rent, and 3% have missed payments.

Instead of falling behind on bills a fifth (22%) of people have borrowed more, a number which has been trending upwards since the start of the year.

There will come a time when these borrowers hit a brick wall, and more and more face the prospect of missing bills. So it’s worth understanding what will happen if you do, and how to protect yourself.

If you miss any bill

There are separate rules applying to different kinds of bills, but whatever payment you miss will have an impact on your credit rating, making it more difficult for you to borrow in the future.

The typical approach is that when you have missed one or two monthly bills the company will try to contact you on order to find out if there’s an underlying problem. They will add late or missed payment fees to your debt, and missed payments will show up in your credit file, but at this stage they will want to try to work with you on a solution.

Read more: How to have a more affordable Christmas

If you miss three or four payments, they will step up the pressure, and you will usually have a default notice added to your credit file, which makes a big difference to your credit rating. Depending on the bill in question, your account might be closed, and they may pass the debt onto a debt collection agency, who will chase you more actively, and add more fees to the debt.

One you have missed five or six payments, the company may go to court for a County Court Judgement, and once they have a CCJ they can send the bailiffs in — all of which racks up fees.

For specific types of bill, there are additional rules.

Energy bills

If your bills go unpaid for at least 28 days, and you refuse to agree a repayment plan, they can force you to move to a pre-payment meter, so you have to pay for your energy in advance.

Arrears will be added to the meter and a sum deducted each week to pay them off. If you don’t make these payments, in extreme circumstances, they may disconnect you.

In many cases they can do all this remotely through a smart meter, but if they need to get into your home, and you don’t let them, they can apply to a court for permission to enter the property.

Water bills

Your water can never be cut off, but once they have sent you reminders and a final notice, they’ll go through the usual process of debt collectors, followed by a CCJ.

They also have the power to apply to the Department for Work and Pensions, so payments are deducted directly from your benefits.

Read more: Workplace schemes are a hit but cost of living crisis remains a threat

However, if you have three or more children or a medical condition that means you need more water than average, you can get extra help.

Rent

If you miss rent payments and don’t come to an agreement with your landlord, they can start the eviction process immediately in certain circumstances.

This applies if you have ever been late with rent before, you’re already in arrears, or if the fixed term period of your tenancy has ended. You may have to leave your home within 14 days.

Mortgage

The mortgage company will try to get in touch and arrange repayments. If this doesn’t work, you can’t agree a new repayment plan, and you continue to miss payments, they can start the court process to repossess your home.

If it goes this far, you will be offered free help on the day of your hearing to come to an agreement with your lender. If that doesn’t work, the court has a number of options and in many cases if you can meet certain repayments, you will be able to stay in your home. However, it also has the power to order you to move out within 28 days.

What should you do?

These things sound drastic, but they’re worst-case scenarios, so don’t panic. There’s every chance you can avoid all of this if you take action as soon as you know you’re not going to be able to pay, or if you miss a bill.

The first step is to get in touch with the company you owe money to, explain the situation, and try to agree an alternative payment schedule. The company often has a duty to try to help you find a solution.

They can suspend extra charges or interest, switch you to a cheaper tariff, or make changes to your arrangements, to make it more affordable. It’s in their interests to work with you to find a sum you can afford each month.

Read more: How buy now, pay later could damage your credit rating

You don’t need to go it alone. You can get help from charities like Citizens Advice, or StepChange. Debt experts can talk to companies for you, and they may be able to apply for "breathing space", on your behalf, which gives you 60 days to work to get on top of your payments again.

They can also let you know if there’s any additional financial help you can get from the state, providers or charities.

If you can do this before missing any payments at all, you should be able to get the same support, but without all the added worry and stress of being chased for bills you can’t afford to pay. So when it comes to impossible bills, the sooner you can act, the easier it will be to find a solution.

Watch: How to prevent getting into debt

• Sarah Coles is a personal finance analyst at Hargreaves Lansdown and co-presents Switch Your Money On podcast.