Benefits are offered to people who find themselves in a difficult financial situation, such as unemployment, disability or they need to care for someone.
Claiming benefits are usually people who have no or are on very low income and getting that extra financial support from the government is seen as a lifeline.
As benefits are ‘means tested’, the amount you are entitled to is based on whether you meet the criteria. If you don’t and have no other regular income, then this could have an impact on 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.
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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 further support.
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 government online 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 important 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, then your landlord or the council can move very quickly into taking you to court for missed payments.
Find out what happens when you get a default notice.
If you’re unsure how to deal with your creditors, feel free to fill out our online form, and our Money Advisor Team will get back to you to guide you.
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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, however 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 very expensive 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 depend 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 you are in debt.
Look at your current gas and electricity bill and see if you can switch to an alternative plan.
However, switching suppliers could to be difficult if you have been 28 days or more in debt with them. They could refuse you switching supplier until you clear the amount owed to them.
If you are on benefits, then you might also be entitled to grants which 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, then it might be worthwhile considering to changing to a metered water meter.
You can test it for 12 months and see if you are making any savings in comparison to the unmetered meter.
Also, if you are on low income then you could be entitled to support for your water bill. Often known as the social tariff, which could help to ease the strain off the water bill.
If, however, you are on a water meter or you are waiting for one to be installed in your home, have a look at the Watersure scheme. Aimed at people who are 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, then you could get help with free school meals, discounts on school uniforms as well as free school transport if you if 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 then ask your service provider if they can offer you a better deal.
BT and Virgin Media both currently offer a reduced rate in broadband to people who are claiming benefits. Customers could see themselves paying £15 on their basic broadband schemes.
However, their criteria is 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 they can join 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, instead of paying for a TV license yearly, you may want to consider paying in instalments. Paying in small chunks will feel like less of a pinch to your pocket than a large amount.
Also, you could be a 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 are still have a troubling financial situation, then there is still help and support if you need it.
Certain 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.
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 a period of 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 be able 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 left over each month, after your essential living costs.
Can I get an IVA when I am claiming benefits and have a wage too?
You could be accepted for an IVA if you have a combination of both, wages and benefits. You just need to prove that both incomes combined with 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.
Find out more about Individual Voluntary Arrangement (IVA) in our comprehensive guide.
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, which is allocated between all your creditors.
It is handled by a debt management company, 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 made up solely on benefits, then you could be entitled to getting a debt management plan.
However, you will only be able to get a 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.
feel free to fill out our online form by clicking here if you want personal help from our Money Advisor Team based on your current financial standing.
