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DRO s and benefit overpayments

edited 30 November -1 at 1:00AM in IVA & DRO
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debt_doctordebt_doctor Forumite
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edited 30 November -1 at 1:00AM in IVA & DRO
icon1.gifImportant info re insolvency and benefit overpayments
Hi All,

Please read below regarding the latest circular for the DWP / Local authorities on overpayments and insolvency..........

http://www.dwp.gov.uk/docs/u1-2012.pdf

Point 5 is the interesting one regarding refunds of amounts taken from debtors since April 2009.

- good news in general, but I am worried about the implications of those currently under a DRO getting a refund of more than £300- asset for DRO purposes?
DD
Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
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  • fermifermi Forumite
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    1. Urgent Bulletin U6/2011, which followed on from U4/2010, G12/2010, U5/2010 and U1/2011 advised that on 14 December 2011, the Supreme Court affirmed unanimously the decisions of the lower Courts in relation to the Secretary of State for Work and Pensions’ (SSWP) v Payne & Cooper.

    2. The judgment means that the Department for Work and Pensions (DWP) cannot recover overpayments of benefit or Social Fund loans by deductions from benefit where that overpayment or loan has been included in a Debt Relief Order (DRO).


    3. The Supreme Court judgment has, however, wider implications in that DWP must also cease making deductions from benefit to recover any overpayments and Social Fund loans that pre-date a Bankruptcy Order made in England and Wales.


    4. By analogy, we take this judgment to apply also in respect of deductions made by local authorities to recover overpayments of housing benefit (HB) and excess council tax benefit (CTB).


    5. It follows that any deductions from benefit that have already been taken to recover overpayments of HB, where those were included as relevant debts in a DRO, must be refunded to the claimant. This applies to all deductions that have taken place since DROs were introduced in April 2009.


    6. However, as these would be arrears of benefit, any refund of deductions, can be set against any other overpayments that are still outstanding, as long as they are for the same benefit, eg a refund relating to recovery of an HB overpayment can be set against any other HB overpayments that are outstanding.


    7. Where there is a Bankruptcy Order, deductions cannot be taken, or continue to be taken, in respect of any overpayments that pre-date the Order. This in contrast to the position for DROs where deductions cannot be taken only where the debt has been included in the DRO.


    8. Once a DRO or Bankruptcy Order has been discharged, any outstanding overpayments subject to these Orders must be written off with the exception of those caused by fraud. Recovery of overpayments caused by fraud can recommence using any recovery methods once the DRO or Bankruptcy Order has been discharged.


    9. The judgment only has application to England and Wales. We are considering the position where a person is subject to a form of insolvency which is unique to Scotland such as Sequestration and Protected Trust Deeds but legal advice is that deductions can continue in those cases for the time being on the basis of existing case law. Further guidance will be issued if necessary.


    10. In order for the DWP to fully assess the impact of the Supreme Court judgment on the recovery of overpaid benefit, we would like LAs to provide us with the information in the table on the following page.
    I'm a Board Guide on the Debt-Free Wannabe, Bankruptcy, Credit Cards and Loans boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to [email protected]

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  • fermifermi Forumite
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    Thanks for alerting us to the updated bulletin DD.

    For ease of reference, I've pasted the text of the 10 points into the above post.
    I'm a Board Guide on the Debt-Free Wannabe, Bankruptcy, Credit Cards and Loans boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to [email protected]

    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

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  • debt_doctordebt_doctor Forumite
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    Hi,

    The DRO Unit have informed us that they do not need to be informed by the debtor if they receive a lump sum from a repayment of over collected benefit / social fund debts.

    Good news !

    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
  • I know this is an old thread, and sorry for dragging it up but it is relevant.

    Does anybody know of anybody who has successfully got the DWP to refund the monies taken and or would DebtDoctor or fermi have any idea of a template letter to send to the DWP and where to send it?

    My DRO was one of the early ones and initially they stopped taking repayments when I advised them of my DRO whilst they investigated. They then phoned a few weeks later to tell me that DRO was treated the same as bankruptcy and repayment from benefits resumed.

    I do feel that there is a strong case for refunds after reading through the case details and the bulletins sent out by the DWP. I however don't know whether refunds would be made in cash so to speak or if they would be applied onto any outstanding social fund balance accrued since the DRO.

    Hopefully one of the people who work in this field will be able to advise more as they may have had clients attempt this.

    Thank you in advance for your time

  • debt_doctordebt_doctor Forumite
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    jamesb1239 wrote: »

    Does anybody know of anybody who has successfully got the DWP to refund the monies taken
    Yes, Me !:D

    I shall dig out a letter for you over the weekend.

    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
  • debt_doctordebt_doctor Forumite
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    jamesb1239 wrote: »
    I however don't know whether refunds would be made in cash so to speak or if they would be applied onto any outstanding social fund balance accrued since the DRO.
    The DWP can ofset against any monies owing (that were not covered by the DRO).

    Otherwise the refund is made by cheque or direct in to bank account.

    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
  • That would be much appreciated, thank you.

    Did they refund without any hassle?

  • debt_doctordebt_doctor Forumite
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    jamesb1239 wrote: »
    That would be much appreciated, thank you.

    Did they refund without any hassle?
    They took a while to respond (typical DWP) and I nearly took it to 2nd stage complaint but withdrew that when they paid up.

    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
  • That's good to hear. I will send them a letter when you dig yours out for me after the weekend.

    Thank you in advance

  • edited 3 September 2012 at 3:45PM
    debt_doctordebt_doctor Forumite
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    edited 3 September 2012 at 3:45PM
    Hi, here is an amended letter..........



    Ref:

    Date

    Job Centre Plus
    (insert your local job centre
    Office address here)




    Formal Complaint

    Dear Sir

    I entered into a Debt Relief Order on____________________ and included an amount owing to the Social Fund/ benefit overpayment within my order.

    The correct legal position at that time was that the DWP had the right to continue making deductions from benefit until the end of the moratorium period, and remaining balance being written off at this time.

    The DWP acted in accordance with the law at the time and made deductions from my benefit.

    On 14th December 2011, the Supreme Court dismissed the appeal made by the DWP (DWP V Payne & Cooper) that deductions could be taken from benefit for those subject to a DRO or Bankruptcy. As a result, the DWP have issued guidance in the form of Urgent Bulletin HB/CTB U1/2012 (enclosed). Paragraph 5 clearly states that all monies taken from benefit whilst the claimant was subject to a Debt Relief Order must be refunded to the claimant.

    I now, as part of this formal complaint, request that the DWP calculate all monies taken from my benefit during the moratorium period of my Debt Relief Order and repay such monies to me.

    Please respond direct to myself at the above address.

    Yours faithfully
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
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