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Debt and Benefits

Debt is often described in negative terms. But borrowing money, or ‘taking on debt’, isn’t necessarily a bad thing. Manageable debts, that you can comfortably pay back over an agreed period, are often necessary in order to take that next step in life.

It’s only when debt repayments become unmanageable or unaffordable that debt becomes a problem.

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Debt & Benefits

Benefits are designed to make life easier for people with financial challenges, such as unemployment, disability or being a carer. People in receipt of benefits are generally more likely to be on lower incomes, so servicing debt can be more difficult. Dealing with debt while receiving benefits can be very difficult and stressful, especially with government caps on benefits.


The most important thing is to check that you’re receiving all benefits to which you’re entitled.


Call us now on 0808 208 5198 if you receive benefits and are struggling with debt. We may be able to help.


Checking benefits and tax break entitlements

Contact Jobcentre Plus to check if there are any benefits to which you’re entitled that you’re not receiving. You can also check this online using the Government benefits calculator.


If you are out of work, you may be able to claim job seekers allowance. This may provide some income which you could use to pay your debts.


Paying back debts while on benefits

Paying off debts can be tough at the best of times, but even more so if you’re on a limited fixed income. If you’ve recently become unemployed, speak to your creditors and ask if they can allow you a payment break while you get your affairs in order and get back on your feet. You’ll be surprised at how helpful some creditors can be. After all, they’d rather get their money back directly from you than having to take legal action.


Getting help

Getting help with your debts when you are on benefits can be difficult as you have fewer options.

For example in Scotland, you can’t use state income to fund a Trust Deed.

Elsewhere in the UK, if you are unemployed and on benefits then an IVA is still a potential option for you. By entering into an IVA you and your creditors would agree on a monthly repayment scheme over the course of five years.

This would be negotiated by looking at your monthly income and expenditure to find a figure you can afford to pay to settle your debt.

It is worth noting that assets such as homes and cars could be taken into account depending on their value.

If debts are stressing you, get in touch with Creditfix today. We offer free, impartial advice to help you take back control of your finances.

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