Claiming benefits are usually people who have no or are on a meagre income, and getting that extra financial support from the government is seen as a lifeline.
Benefits are offered to people who find themselves in a difficult financial situation, such as unemployment, disability, or need to care for someone.
As benefits are ‘means tested’, the amount you are entitled to will be based on whether you meet the criteria. If you don’t and have no other regular income, this could impact your finances and get you into debt.
If you are claiming benefits and are in debt, then read on as we will talk you through the steps you can take to help you get out of debt whilst you are claiming benefits.
Spot the signs and find out when you need debt help.
1. Contact the Job Centre and Maximise your Benefits
You might think you have all the benefits you can get; however, there might be a chance that you are entitled to support further.
If you contact Jobcentre Plus, they will tell you whether you are getting the correct benefits. If there is a shortfall, then you could be entitled to more. You can also use the online government calculator to check this too.
Ensuring that you have maximised your benefits entitlements could mean the extra helping hand could keep your cash afloat.
2. Ask for Breathing Space
Getting into debt can sometimes be overwhelming. If you find yourself struggling to pay your priority bills, such as your rent or council tax, then it is essential to act fast and speak to your lender about giving you a payment break.
A payment break could give you some time to get back on your feet. It may also mean that you are waiting on a decision for a benefit entitlement that is due to be authorised.
If you don’t act fast, your landlord or the council can quickly move into taking you to court for missed payments.
Find out what happens when you get a default notice.
3. Reduce your Monthly Food bills
Food is a necessity; however, that doesn’t mean you can’t be frugal with your spending. Take a look at your monthly or weekly shopping bills. Are there ways in which you could reduce the bill? We don’t mean cutting out the essentials; finding cheaper alternatives is always a good place to start.
Rather than going for branded options, try a more affordable alternative. You might even like it. Alternatively, luxury items such as alcohol can be costly, so reducing the amount you buy or cutting out buying it at all could reduce your bill tremendously.
Find out more on how you can reduce your monthly food budget.
4. Get a discount on your council tax
You might be able to get a council tax reduction or a discount if you are on a low income or claim benefits.
How much discount you are entitled to depends on your local council. Check out if you can get a Council Tax Reduction by visiting the GOV.UK website.
Find out more about council tax debt here.
5. Saving money on your gas and electric bill
With the rising costs of energy bills, saving money is essential, especially when in debt.
Look at your current gas and electricity bill and see if you can switch to an alternative plan.
However, switching suppliers could be difficult if you have been 28 days or more in debt with them. They could refuse you switching suppliers until you clear the amount owed to them.
If you are on benefits, you might also be entitled to grants that help with home insulation or fitting a more efficient heating system in your home.
6. Save money on your water bill
Check your water bill. If you are currently on unmetered billing, it might be worth considering changing to a metered water meter.
You can test it for 12 months and see if you are making any savings compared to the unmetered meter.
Also, if you are on a low income, you could be entitled to support your water bill, often known as the social tariff, which could help ease the strain of the water bill.
However, if you are on a water meter or are waiting for one to be installed in your home, have a look at the Watersure scheme. Aimed at people claiming benefits, the scheme caps the amount, so you will never pay more than the average in the area.
7. Help for school-aged children
If you have children in school, you could get help with free school meals, discounts on school uniforms, and free school transport if you are claiming benefits.
Speak to the school or get in touch with the local council so you can find out how to do this. Making an approximate saving of £11 per week per child on school meals could help to save that well-needed cash to clear your debts.
8. Switch to cheaper phone, broadband and TV
If you are getting benefits, ask your service provider to offer you a better deal.
BT and Virgin Media both currently offer a reduced rate in broadband to people claiming benefits. Customers could see themselves paying £15 on their basic broadband schemes.
However, their criteria are strict, and it is currently only offered to people who claim certain benefits. Even then, the claimants have to show evidence that they are receiving benefits before joining the scheme.
9. Pay less for your TV license
A TV license is an additional cost. Although there is an argument on whether we should pay for a TV license at all, for now, if you watch TV, then you will have to pay.
If you are struggling with debt and want to manage your money better, you may want to consider paying in instalments instead of paying for a TV license yearly. Paying in small chunks will feel like less of a pinch than a significant amount to your pocket.
Also, you could be entitled to a free TV license if someone in your household gets Pension Credit. They or you must be over 75, and they get Pension Credit or have a partner living at the same residence.
10. Get help and support
If you have tried all the above and still have a troubling financial situation, there is still help and support if you need it.
Specific debt plans don’t accept applications from people who are claiming benefits. However, there are still a few solutions that are designed to help people who are on benefits.
Individual Voluntary Arrangement (IVA)
An Individual Voluntary Arrangement (IVA) is a formal and legally binding agreement between you and your creditors to pay back all or part of your debts over some time at an affordable rate.
Can I get an IVA if I am claiming benefits?
You can start an IVA even if your income is just made solely on benefits. To be accepted for an IVA application, you need to prove that you can make the monthly payments set out in the IVA arrangement.
Your monthly payments will be based on how much money you have leftover each month after your essential living costs.
Can I get an IVA when I claim benefits and have a wage too?
You could be accepted for an IVA if you have a combination of both wages and benefits. You need to prove that both incomes combined allow you to make the repayment plan set out in the IVA. Typically, you will have to pay at least £80-100 per month towards your debts.
Please find out more about Individual Voluntary Arrangement (IVA) in our comprehensive guide.
Debt Management Plan (DMP)
A debt management plan (DMP) can be used to help you pay off your debts. It is not a legally binding agreement and is set up by you and your creditors to pay off nonpriority debts. These can include loans, credits cards and store cards.
The debts are paid back by setting up one monthly payment allocated between all your creditors.
A debt management company handles it, so it takes away the stress of you having to communicate with your creditors.
Can I get a DMP if I am claiming benefits?
This is at the discretion of your creditors. If your income is solely on benefits, you could be entitled to getting a debt management plan.
However, you will only be able to get debt management on non-priority debts such as credit card debt or store card debt. Debt management plans will not cover rent debt, mortgage debt or council tax.
To find out more about Debt Management Plans, visit our guide here.
