If you don't make the monthly payments on your contract Vodafone will report this to the credit reference agencies which will put marks on your credit file. These in turn will prevent you from getting any sort of credit in the future, be it a credit card, mobile phone contract or a mortgage. It is a very serious situation to be in. Vodafone will also pursue you for non-payment via debt collectors.
The best way to resolve this is to phone customer services and ask to speak to someone about perhaps setting up a payment schedule to pay off what you still owe on your contract. Alternatively you could pass on your contract to a friend/relative who could make the payments although doing this means they would have to pass a credit check.
Please don't just not pay, it is the last thing you should be doing. Try to come to some arrangement with Vodafone. Of course, if you cannot make the original payments each month on the contract you will not be able to use the contract allowances of minutes, data etc. The only other thing you could do is pay off the remainder of the contract which is worked out as total due less 20% VAT less 2% but I doubt in your situation you would be able to do this.
Whatever you do, you are still liable for the money you owe to Vodafone to the end of your contract and one way or another you will still have to pay it, be it now or when they send the debt collectors. It is advisable not to get to that stage so please, ring and speak to someone or wait for a Vodafone employee to contact you on this forum to try to come to some agreement.
BD 
When you upgrade and get a phone it is yours to do what you want with. You are effectively buying the airtime (regardless of whether you get a new phone with the contract free or for a small contribution). So basically yes, you can do what you want with the phone. Your sim is blocked for non payment, not your phone. The only time an IMEI is blocked is if the phone is reported as stolen.
BD
Hi ktcrumps,
You've been given some very good advice here, I'd just like to clear a few things up for you
The phone is yours, regardless of whether you paid for it or not when you arranged your upgrade - the SIM card remains the property of Vodafone though.
If you don't/can't pay your monthly bill then we will restrict the service to the handset via the SIM card, not the IMEI of the phone so you would still be able to put another SIM into the phone - this would hold true even if you sold the phone to another user.
With regards to the financial difficulties you're facing, please do contact us to see what we can do to help - we may be able to prevent the situation from becoming worse.
I've sent you a PM with some instructions on how to contact the team - follow these and we'll be in touch as soon as we can to discuss your options.
Paul
