Debt and benefits



When you’re receiving benefits and dealing with debt, it’s even more important you find the right debt repayment plan. In this guide we’ll explore what benefits are, and where you can get the debt advice and debt solutions you need to deal with your debt while on benefits.


What are benefits?

What are benefits?,

Also known as welfare, benefits are payments made by the government to people who need financial help and support, whether they are unable to work, or simply have low income. They help people pay their energy bills, rent, and other living costs.

Benefits are paid to a recipient’s bank account via direct debit and are handled by the Department of Work and Pensions (DWP). The DWP take care of welfare payments for the whole of the UK, although there are certain benefits that are specific to England and Wales, Northern Ireland, and Scotland.

Unfortunately, the people most likely to receive benefits are often the same people who find themselves in debt problems. Making debt repayments can be difficult for anyone, but especially so if your financial situation is already precarious.

How do I know which benefits I'm entitled to?

How do I know which benefits I'm entitled to?,

If you’re struggling with debt management and you’re on benefits, it’s important that you make sure you’re getting all the help you’re entitled to. Some of the most common benefits available in the UK include:

  • Universal Credit
  • Tax credits
  • Jobseeker’s allowance
  • Pension Credit
  • Income support
  • Council tax reductions

There are several online resources you can use to figure out if you qualify for Universal Credit or any other benefit payment. You can visit the benefits section of the UK Government website, where you can use their easy Benefits Checker. You’ll also find useful content and more information.

Turn2us also has their own online benefit calculator. Turn2us are a UK charity that helps low-income people get access to welfare. Their calculator helps you calculate which payments you’re entitled to in exchange for a few personal details.

Paying back debts while on benefits

Paying back debts while on benefits,

Repaying debts can be tough at the best of times. If you’re living with a limited income on benefits, it’s even more of a challenge, and using the money you need just to get through day-to-day life to repay your debts can be a tough juggling act.

If you’re unemployed and living with debt, it’s important to be aware of the support that’s available to you. It’s always a good idea to let any companies you’re in debt to know that you’re struggling. They may be able to offer you a payment break or a payment deferral until you get back on your feet.

After you’ve done this, you should explore the different debt relief solutions that are out there.

Can I get debt help if I receive benefits?

Can I get debt help if I receive benefits?,

If you’re on benefits, getting help with your debt can be more of a challenge because there are fewer options. Don’t be discouraged – there’s always a way out of debt.

You won’t be able to get a Trust Deed in Scotland if you’re living solely on benefits, but you may still meet the criteria if you receive benefits in addition to your wage.

What debt relief solution is best for me if I'm on benefits?

What debt relief solution is best for me if I'm on benefits?,

It can be difficult for someone on benefits to access a formal debt solution. In Scotland, for example, a protected Trust Deed isn’t usually available to people receiving welfare payments. There are always ways to handle debt repayment, however. Below are some possible options for you.

Debt Management Plan

A Debt Management Plan (DMP) is one of the most popular informal debt solutions available (‘informal’ means not legally binding, so you won’t get legal protection from creditors). It allows you to set up a repayment plan that suits your budget, and repay your debts in your own time.

Because a DMP gives you a degree of control over your own budget, your benefits will be taken into account, and you will never be forced to make repayments you can’t comfortably afford.

Minimal Asset Process

The Minimal Asset Process (MAP) is a Scottish debt solution similar to the Debt Relief Order (DRO) available in England. It’s a form of sequestration that allows low-income people with little-to-no assets to enter into bankruptcy and have their debts written off after six months.

The MAP is aimed specifically at people on low-income, or living solely on income-dependent benefits. That means if you’re on welfare, it won’t be a disqualifying factor – it’s a suitable option for you to repay your creditors.

Debt Arrangement Scheme

The Debt Arrangement Scheme (DAS) is the UK’s only statutory debt management plan.

If you’re struggling with unsecured debt, the DAS provides breathing space and allows you to repay your debt in full at an affordable rate.

Interest and charges are frozen for the duration of your agreement and creditors will be prevented from taking further legal action against you or threaten further court action.

The DAS is available to residents in Scotland who owe money to one or more creditor and have a reasonable disposable income left each month after essential living expenses have been taken into account.

What if I'm in debt due to benefit overpayments?

What if I'm in debt due to benefit overpayments?,

There are certain scenarios where you may find yourself in debt to the Department for Work and Pensions (DWP), the Government department who handle your benefit payments.

The most obvious reason for this is benefit overpayments – whether you’re on Universal Credit, receive income tax credits, or are using Jobseeker’s Allowance, occasionally the DWP will make mistakes that result in you receiving more money than you’re entitled to.

If you’ve received a benefits overpayment, you should contact DWP as soon as you recognise the error, and discuss ways in which you can repay the money you owe. If you owe money, the DWP will act like any other creditor and chase you for payment. In the most serious cases, they may even seek legal action, so it’s important you start the conversation as soon as you notice an error.

Where can I get debt advice if I'm on benefits?

Where can I get debt advice if I'm on benefits?,

At Carrington Dean, we understand that speaking up about your debt isn’t always easy. That’s why our experienced and trained advisers are on hand to put you at ease. We offer straightforward, impartial advice to guide you through the process of finding the right debt solution.

Whether you’re looking for more information on debt and benefits, or you’re looking into the possibility of entering a debt repayment programme, we understand no two clients are the same.

We’re proud to offer support that’s tailored to your situation, and we’ll do our best to help you get on top of problem debt. All it takes is one conversation, so let’s get started. Call us for free today on 0800 043 1320.


  • There are several resources available online that can help people determine which benefits they may be eligible for.
  • Repaying debts can be difficult for anyone, but it can be even more challenging for those on benefits.
  • People who are solely living on benefits may not be able to access some formal debt solutions, however there are still options available to manage debt repayment.
  • If people are in debt to the DWP due to benefit overpayments, they should contact them as soon as possible to discuss repayment options.
  • Carrington Dean provides debt advice and tailored support to help people find the right debt solution for their situation.