Universal Credit can in some instances pay claimants with more than they’re entitled to. This could be a harmless mistake but it could cost some claimants who are not careful with their finances.
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Usually, if overpayments occur the DWP will reduce the claimant’s payments by between 15 percent and 25 percent of their standard allowance.
This reduction would have stayed in place until the debt had been completely repaid.
However, these repayment rules were suspended in April in response to the coronavirus outbreak.
In the announcement, the DWP confirmed: “Deductions for the recovery of Universal Credit and legacy benefit overpayments, Social Fund loans and Tax Credit debts will be paused.
“The majority of deductions will be suspended automatically, however if you currently make repayments through a Bank Standing Order, Bank Giro Credit or through online banking, please contact your bank to cancel your arrangement.”
These changes were reliving for struggling claimants but repayments may start back up this month.
Repayments could start to be paid back from today in some cases, which may catch some claimants off guard.
If debt is owed, it will automatically start to be taken from the payments again.
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This could affect any benefit claimant who has received overpayments in some form but it may particularly affect people who have taken a budgeting loan.
Budgeting loans can be awarded to people who have been receiving one of the following benefits over the previous six months:
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Pension Credit
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Budgeting loans can be provided by the government to help pay for things like furniture, maternity costs or clothing.
These loans, so long as they were awarded, would allow people to borrow £100 as a minimum but they could go as high as £812 under certain circumstances.
Because of the relatively high amounts of money paid out, the repayments could be very substantial, which is one of the reasons the government put a pause in place.
Benefit claimants who have received one of these loans should keep an eye on their payments as we move into the summer months.
Budgeting loans are not available for Universal Credit claimants, who will have to apply for Budgeting Advances instead.
These advances are designed to help with one off emergency costs such as
- Replacing a broken cooker
- Getting job or staying in work
- Funeral expenses
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