Repay my DWP Debt Management Debt? – READ THIS BEFORE PAYING
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
Dealing with DWP debt can be difficult and stressful. But don’t worry; you’ve come to the right place. Each month, over 170,000 people visit our website looking for guidance on debt problems.
In this simple guide, we’ll share:
- Why you might owe money to the DWP
- The role of DWP Debt Management in handling overpayments
- How to contact the DWP
- What to do if you can’t afford repayment to DWP
- How to legally write off debt
Dealing with debt can be worrying, and it’s common to feel unsure about asking for help. In fact, Citizens Advice revealed that 60% of adults facing financial difficulties hesitate to seek assistance.1
But you’re not alone. We understand your concerns and are here to help you find the best solution for your debt.
Let’s dive in!
Why Would I Owe Money to the DWP?
You would owe money to the DWP if you have been paid a social benefit, and your circumstances change but you don’t tell them and therefore they continue paying you your social benefit.
However, once they find out that there’s been a mistake and you have been overpaid, you might need to repay what you owe.
The DWP Debt Management can also contact debt collectors who will help in recovering the debt owed.
It is advised that you let the DWP know right away if you are being overpaid or if your circumstances change, even if you’re not sure that the change will make a difference to your welfare.
Keep in mind that it’s important to check your Universal Credit journal if you have one because missing important messages could mean you’re completely unaware you owe money in the first place.
Read our article DWP Debt Management Letter – Should You Pay? 2022 Guide here to find out what to do next if you do owe DWP money.
How Much Can DWP Take for an Overpayment?
When you’re no longer eligible for any benefit you’re receiving and do not inform the Department for Work and Pension, you owe some money to them.
In fact, repaying DWP overpayments is considered to be very important.
To account for the overpayment, the DWP could decide to take an amount from your benefit. The maximum amount they can take depends on your yearly earnings and whether you’re guilty of an offense.
When making a decision, they consider a number of things. For benefits like income support and pension credit, the deduction rate is 5%.
However, when dealing with Universal Credit, the deductions for overpaid securities can be 10% and can go up to 40% varying case from case.
If you are concerned about repaying DWP overpayments, contact the DWP as soon as possible to discuss your options.
Debt Solutions Comparison
Dealing with debt can be quite scary and concerning. But don’t worry, there are different debt solutions available that can help you manage your finances.
These are:
| Debt Solution | Description | Formality | Debt Type | Debt Range | Legally Binding | Impact on Credit Score | Asset Risk | Monthly Payment | Duration | Creditor Agreement Required |
|---|---|---|---|---|---|---|---|---|---|---|
| Debt Management Plan (DMP) | Agreement to pay back non-priority debts in one monthly payment. | Informal | Non-priority debts | Any amount |
No | Yes | No | Varies | Varies (until debt is paid) | No (but creditors must be informed) |
| Individual Voluntary Arrangement (IVA) | Agreement to pay back all or part of your debts over a set period. | Formal | All or part of debts | Usually over £10,000 | Yes | Yes | Possible | Fixed | Fixed period, usually 5-6 years | Yes (75% by debt value must agree) |
| Debt Relief Order (DRO) | Freezes debt for a year and be potentially written off. | Formal | Non-priority debts | <£20,000 debt | Yes | Yes | No | None during freeze | 12 months | No (court approval needed) |
| Bankruptcy | Legal status for those who cannot repay debts, potentially writes off debts. | Formal | Unmanageable debts | Any amount, typically high debt | Yes | Yes | High | None during bankruptcy | Usually 12 months, then discharge | No (court process) |
| Consolidation Loan | Taking out a new loan to pay off all existing debts. | – | Multiple debts | Based on loan amount | Varies | Yes | Depends on loan type | Fixed | Depends on loan terms | No |
| Payment Holiday | Temporary relief or reduced payments offered by creditors. | – |
short-term financial difficulties | Any | No | Yes | Low | Reduced or paused payments | Break of up to 6 or 12 months, depending on circumstances, payment history, and creditor’s policy. | No |
| Informal Negotiation | Direct negotiation with creditors for reduced payments or extended terms. | – | All debts | Any | No | Possible | No | Negotiable | Until agreement terms are met | No |
| Statutory Debt Repayment Plan (SDRP) | Plan to repay debts over a reasonable time, with protections from creditor action. | Formal | All debts | Varies | Yes | Yes | No | Fixed | Varies, based on ability to pay | Yes |
| Equity Release | Homeowners release equity from their home to pay off debts. | – |
Debts of homeowners, typically older individuals aged 55+ | Varies and depends on property value | Yes | Yes | Asset (home) is used as collateral | Varies | 8-10 weeks timeframe from application to fund disbursement. Lifetime; repaid on house sale/death. | No |
How a debt solution could help
Some debt solutions can:
- Stop nasty calls from creditors
- Freeze interest and charges
- Reduce your monthly payments
A few debt solutions can even result in writing off some of your debt.
Here’s an example:
Situation
| Monthly income | £2,504 |
| Monthly expenses | £2,345 |
| Total debt | £32,049 |
Monthly debt repayments
| Before | £587 |
| After | £158 |
£429 reduction in monthly payments
If you want to learn what debt solutions are available to you, click the button below to get started.
Can I Avoid DWP Overpayments?
Unfortunately, avoiding DWP overpayments isn’t always possible!
You can make sure that you give as much information as accurately as you can but most other errors happen at their end!
If you think that you have been overpaid, you can notify the DWP as soon as possible and put the overpayment to one side. That way you will be able to return the overpayment as soon as DWP request it.
But knowing when you have been overpaid can be difficult.
If you’re not sure, you can request a written statement of the reasons DWP suspect an overpayment. You need to do this within a month of the suspected overpayment.
» TAKE ACTION NOW: Fill out the short debt form
If you feel that you were not overpaid but DWP says that you were, you can challenge the decision by requesting a mandatory reconsideration. That said, disputing a DWP overpayment is not always successful.
DWP will probably carry on trying to collect the debt during this process but keep calm and tell that you are challenging their decision.
What Can I do if I Can’t Afford Repayment to DWP?
If you can’t afford to repay your overpayments, I recommend that you get some financial advice.
There are several charities and other organisations in the UK that offer free debt counselling services. They will be able to walk you through your options or even discuss what debt solutions you could benefit from:
Thousands have already tackled their debt
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DWP Contact Details
| Telephone: | 0800 731 7898 Relay UK (if you cannot hear or speak on the phone): 18001 then 0800 731 7898 |
| Textphone: | 0800 731 7339 |
| Department Website: | https://www.gov.uk/government/organisations/department-for-work-pensions |
| Manage Benefit Repayments Website | https://www.gov.uk/repay-manage-benefit-owed |
FAQs
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