Yes, you have the settle the device plan as it is a personal loan, but you can recycle the phone and use the money to pay towards the settlement figure.
See also our help guide to refresh here https://community.o2.co.uk/t5/Pay-Monthly-Pay-and-Go/How-does-O2-Refresh-work/ba-p/1014093
I have no affiliation whatsoever with O2 or any subsidiary companies. Comments posted are entirely of my own opinion. This is not Customer Service so we are unable to help with account specific issues.
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