What-Are-Benefit-Overpayments-Consumer-Debt-Help

What Are Benefit Overpayments

You may receive benefits from the UK government for housing, council tax, universal credit or jobseekers allowance. Other benefits include pension credit and personal independence payment. Sometimes, mistakes mean you might receive too much. This is known as a benefit overpayment. It might not be your mistake, but there are still consequences later on. So what are benefit overpayments and how should you respond?

Table of contents:

    Why Do Benefit Overpayments Happen

    The Department for Work and Pensions or DWP organises and sends out benefits to people who need them in the UK.

    As of February 2019, 20 million people were claiming benefits. Of these, two thirds of claimants are of State Pension age, that’s 13 million people. Meanwhile, there are 6.8 million people of working age claiming benefits. From this number of people, mistakes are made, whether through administration, or during the application itself.

    Overpayments can also happen if your circumstances change, maybe you are now married, or your children have left home. This means you are not entitled to the benefits you had previously. So perhaps your information is not up to date. With this in mind, you do need to inform the DWP as soon as your situation changes.

    What If You Keep Quiet About Benefit Overpayments

    It’s probably a nice surprise initially that you gain more money than you expect. However, if you don’t mention benefit overpayments and keep quiet, then this can lead to a prosecution for benefit fraud. Or you may have to pay a penalty. It’s always best to be honest and speak to the DWP, so that they can correct the mistake.

    What Are The Consequences Of Benefit Overpayments

    Furthermore, if you get found out, not only will you have to pay back what you owe, there’s also interest and other charges too. There’s even the possibility that you could end up in court with a criminal record. Hence it’s important to speak up as soon as possible. The longer the overpayments continue, the more you’ll have to pay back. This can build up into debt that you can’t afford to pay.

    What If I Can’t Afford Repayments

    Potentially if benefit overpayments have been going on for a while, then you may not be able to pay it back. In which case, you should still talk to the DWP as soon as possible to discuss your situation.

    There are a range of options available to you, such as paying benefit back in installments or even making smaller payments over a lengthy period of time. Or you might be able to ask for deductions if you are receiving other benefits.

    If there is no solution, then the DWP may consider bankruptcy or a debt relief order. This will stay on your credit report for many years and can cause other consequences when it comes to borrowing money in the future.

    It’s unusual, but in some cases benefit overpayments can be written off. However, it depends on the case.

    How To Make Benefit Repayments

    When you get a benefit overpayment, what do you do next? After contacting the DWP, there are different ways to make repayments.

    For example, if you’re still receiving benefits, then the regular amount you get will reduce until you pay back what you owe. In which case, you may not receive as much as you would normally expect. If this causes further difficulties for you, then you should seek free debt advice and support.

    Meanwhile, if you don’t receive benefits anymore, but you need to pay back overpayments, then you’ll get a letter from the DWP. This will explain how to repay the benefit money you owe either in full or through regular monthly payments.The simple way to repay benefit money if you no longer receive benefits is through your bank account.

    However, if you don’t pay back the money, then your case may go to an independent debt collector. You will receive a letter to tell you this. If this happens, you need to deal directly with the debt collector about repayments.

    What If A Person Has Died

    The DWP can still collect benefit overpayments from a person’s estate after they die. Although upsetting for the family, this can happen for the following reasons;

    • The person has more savings than they said in their benefit form
    • They have a hidden income
    • Or they were in a hospital or nursing home while claiming benefits and didn’t tell the DWP.

    When this happens, the DWP get in touch with the person who is dealing with the estate. The letter will include why they are asking for payments and how they work out how much is owed. After that, they can collect any benefit overpayments from the estate in line with the rules.

    If you don’t provide the information the DWP ask for, then they calculate any overpayment from the probate figure before any deductions.

    However, if you disagree with the decision, there is also an opportunity to explain why and ask the DWP to reconsider. This is a ‘mandatory reconsideration’.

    Conclusion: Benefit Overpayments

    To sum up, the most important thing to remember with benefit overpayments is to get in touch with the DWP as soon as possible. While it may be useful to receive extra money in your account, this mistake can lead to you facing charges of benefit fraud. You may think that just keeping quiet about it will be enough and perhaps such a large organisation won’t notice a few mistakes here and there.

    However, the consequences of a potential court appearance, fine or debt collection can cause long lasting damage to your family or situation.

    Perhaps it’s not your mistake. You may have alerted the DWP about a change in circumstance which hasn’t been updated. The overpayment is a complete surprise to you. Still get in touch with the DWP immediately to explain that a mistake has been made.

    Recent Posts

    What-Are-The-Best-Ways-To-Pay-Off-Credit-Card-Debt

    What Are The Best Ways To Pay Off Credit Card Debt?

    [quotetool] Credit card debt is a type of debt that is incurred when you use…

    What-Impact-Does-The-Cost-Of-Living-Crisis-Have-On-Debt

    What Impact Does The Cost Of Living Crisis Have On Debt?

    What is the cost of living crisis? The cost of living crisis is a term…

    How-To-Get-Help-With-Rent-Arrears

    How To Get Help With Rent Arrears

    What are rent arrears? Rent arrears occur when a tenant falls behind on their rent…

    What-Are-The-Best-Ways-To-Pay-Off-Credit-Card-Debt

    What Are The Best Ways To Pay Off Credit Card Debt?

    [quotetool] Credit card debt is a type of debt that is incurred when you use…

    What-Impact-Does-The-Cost-Of-Living-Crisis-Have-On-Debt

    What Impact Does The Cost Of Living Crisis Have On Debt?

    What is the cost of living crisis? The cost of living crisis is a term…

    How-To-Get-Help-With-Rent-Arrears

    How To Get Help With Rent Arrears

    What are rent arrears? Rent arrears occur when a tenant falls behind on their rent…