DRO's and HB / CTB OVERPAYMENTS

debt_doctor

Hi all,

Not sure if any of you have seen this yet - basically it means that on going deductions from benefit for a debt included in a DRO can no longer happen.

DWP Deductions from Benefits

The DRO Unit recently advised your Competent Authority of the outcome of a Judicial Review.
On Monday the 26th July 2010 a judge in the Administrative Court ruled on Judicial Review that the Secretary of State does not have the right to recover overpayments of Social Security benefits and Social Fund loans by making deductions from an ongoing award of benefit when the debtor is subject to a Debt Relief Order (DRO).
The DWP are reviewing the implications of this decision and of course do have the right to appeal. However in a bulletin dated the 28th July 2010 issued to all Housing Benefit and Council Tax Benefit staff, the DWP have advised that both they and Local Authorities must cease making deductions on cases where the overpayment was included in the DRO. They must also not commence deductions on any further overpayments which are included in a DRO.
The DWP will be issuing further guidance to their staff as soon as the decision has been fully assessed. This will include information on the provision of refunds and the position on Fraud overpayments.

DD

ariarnia

I'm sorry, but can someone explain what this actually means? My MIL has just been made redundant and owes council tax as she was incorrectly billed for about 4 months and has been told she needs to pay back £500 by invoice, she can't afford to do this so they have doubled her council tax bill over the next 6 months to pay it off. She will be on JSA (she's 54) until she can find another job so we're wondering how they will expect her to pay the countil tax back on £65 a week.

So, does this mean if you've been overpayed council tax and housing benifit it can no longer be deducted from your benifit? And is that the same as owing arrears because it was calculated incorrectly?

So how do they want you to pay it back now?

Is it only if you have a debt relief order and how can one get one of these?

Thank you.

tigerfeet2006

I am afraid it is only if you have a DRO that this applies to.

Tell your Mum to talk to one of the debt charities (links and no.'s in my sig.) and they will go through her options with her and if they feel she is eligable for a DRO they will arrange it.

miss_spooky

ariarnia wrote: »

I'm sorry, but can someone explain what this actually means? My MIL has just been made redundant and owes council tax as she was incorrectly billed for about 4 months and has been told she needs to pay back £500 by invoice, she can't afford to do this so they have doubled her council tax bill over the next 6 months to pay it off. She will be on JSA (she's 54) until she can find another job so we're wondering how they will expect her to pay the countil tax back on £65 a week. If she lives on her own & her only income is JSA she should qualify for council tax benefit (and Housing benefit if she rents), it will start from the date she gets down to council & make applicaito, so that may reduce what she has to pay back as she will only have arrears to pay & not current tax.

So, does this mean if you've been overpayed council tax and housing benifit it can no longer be deducted from your benifit? And is that the same as owing arrears because it was calculated incorrectly?

So how do they want you to pay it back now?

Is it only if you have a debt relief order and how can one get one of these?

Thank you.

She could challenge the council to find out why they took 4 months to realise there was a problem?

debt_doctor

"If she lives on her own & her only income is JSA she should qualify for council tax benefit (and Housing benefit if she rents), it will start from the date she gets down to council & make applicaito, so that may reduce what she has to pay back as she will only have arrears to pay & not current tax."

- and the arrears payment would be £3.25 per week (standard amount whilst on JSA)

DD

CIS

- and the arrears payment would be £3.25 per week (standard amount whilst on JSA)

£3.30 from this year.

Deductions can only be taken direct from benefits if a liability order has been granted.

debtinfo

This is very interesting debt doctor, couple of points/questions. I presume this does not affect the same situation with bankruptcy where ongoing deductions can be made until discharge.

"Included in DRO", are the same rules as bankruptcy applied ie that to be included they must have formerly requested repayment prior to the DRO starting for it to be included

In bankruptcy all these types of overpayment are grouped together benefits and Tax credits, so in this case does this rulling cover tax credit overpayments as well

CIS

This is very interesting debt doctor, couple of points/questions. I presume this does not affect the same situation with bankruptcy where ongoing deductions can be made until discharge.

For council tax deductions will cease on bankruptcy.

debt_doctor

debtinfo wrote: »

This is very interesting debt doctor, couple of points/questions. I presume this does not affect the same situation with bankruptcy where ongoing deductions can be made until discharge.Correct,bankruptcy remains that deductions can continue until discharge.

"Included in DRO", are the same rules as bankruptcy applied ie that to be included they must have formerly requested repayment prior to the DRO starting for it to be included An outstanding amount must be able to be quantified, but a formal demand not required. This ruling also applies to social fund loans where no demand will have taken place.

In bankruptcy all these types of overpayment are grouped together benefits and Tax credits, so in this case does this rulling cover tax credit overpayments as well Thats a tricky one!- at the moment this ruling is against the DWP (which is the governing body in HB and CTB even though the benefit is administered by the local authority) In the bankruptcy 'Balding' case the inland revenue decided it applied to them but unclear whether the IR (who adminster tax credits)will go along with this ruling.

The next big case coming up is with the water companies, which I have had a lot to do with!

DD

debtinfo

Thanks for the reply debt doctor

Is it to much to ask that we have one rule that applies to all types of insolvency and to all types of creditors;)

bat-out-of-hell

debt_doctor wrote: »

The next big case coming up is with the water companies, which I have had a lot to do with!

DD

Explains why you have been so quiet of late;):D

debtinfo wrote: »

Thanks for the reply debt doctor

Is it to much to ask that we have one rule that applies to all types of insolvency and to all types of creditors;)

Yes is the most likely answer to that DI, but it would nice wouldnt it;)