Universal Credit consumers who are struggling to pay their bills may be awarded a Government lifeline to help them get by - but it comes with a catch.
Although the benefit among others are designed to assist those who need financial aid due to a lack of employment, many can still be left short with their outgoings outweighing their income, especially during the ongoing cost of living crisis.
However, the Government have told people that they may be eligible to receive a one-time payment of up to £812 in the form of a Budgeting Advance, but the sum will have to be paid back in the future.
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The monetary boost is catered to help Britons in the most unexpected circumstances which may leave them strapped for cash, for example, if a family member dies and funeral costs need covering, or if an essential vehicle needs repairs.
The loan is then paid back in instalments directly being subsidised from the claimant's Universal Credit, with those no longer in receipt of the benefit paying it back with wages or in deductions from other benefits. The Mirror reports that you don't pay any interest on the advance though.
Here's everything you need to know about Budgeting Advances:
How much can I borrow through a Budgeting Advance?
The smallest amount you can borrow is £100 and the most is £812 if you have children.
You can get up to:
£348 if you’re single
£464 if you’re part of a couple
£812 if you have children
How much you can get depends on whether you can pay the loan back and if you have any savings over £1,000. The amount you can borrow is reduced by £1 for every £1 you have in savings over the £1,000 threshold.
Who is eligible for a Budgeting Advance?
You have to meet certain criteria to get a Budgeting Advance - so not everyone on Universal Credit will be accepted for one.
To be eligible for the financial help, you must have been getting one of the following benefits for six months or more:
- Universal Credit
- Income-related Employment and Support Allowance
- Income Support
- Income- related Jobseeker’s Allowance
- State Pension Credit
The only time this won’t apply is if you need the money to help you start a new job or keep an existing job. You must also have earned less than £2,600 (£3,600 jointly for couples) in the past six months and have paid off any previous Budgeting Advances.
How do I repay a Budgeting Advance?
You’ll need to repay your Budgeting Advance through your future Universal Credit repayments - but as we mentioned above, you won’t pay interest on top. The first deduction is made on the day you get your next payment after being accepted for the loan and the full amount must be repaid within 12 months.
If you stop claiming Universal Credit, you’ll still need to repay your Budgeting Advance. Payments will either need to come out from your wages, if you’re now in work, or from other benefits you may be getting.
If you don’t make payment arrangements, the DWP can contact your employer to recover what you owe. The DWP can also contact a debt collection agency to collect any outstanding payments - so keep this in mind before applying for a loan.
How do I apply for a Budgeting Advance?
If you’re struggling and in need of a Budgeting Advance, you’ll need to apply through your Jobcentre Plus work coach. They should explain how much you can borrow and how much you’ll need to repay each month.
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