PEOPLE on certain benefits are just discovering they qualify for a one-off £812 payment.
The government provides a Budgeting Loan to low-income households struggling with the cost of living.
It can help tie people on a low-income over if they have something urgent to pay for or are in between jobs.
And people are only just realising that they may be able to qualify.
Under a post about a budgeting loan on Facebook, one person wrote: "What is a budgeting loan what can u get these for?"
While another said: "What can you get a budgeting advance for? Many thanks."
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What is a budgeting loan?
A budgeting loan an interest-free loan from the government which means you'll only have to pay back what you borrow.
Budgeting Loans are a far cheaper way to borrow cash compared to using a payday or doorstep lender who charge high-interest rates which could see you plunge further into debt.
The Budgeting Loan is available to those who are claiming certain benefits and it's called a Budgeting Advance for those on Universal Credit.
To pay it back you'll see a reduction in your monthly benefit payments in the future – so you'll need to budget for that.
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But these loans can be most beneficial for emergency situations like when a household is forced to replace a broken boiler.
You'll qualify if you've been on certain benefits for at least six months but some people are only just realising you could be eligible if you're on PIP.
The benefits are:
- Income Support
- income-based Jobseeker’s Allowance
- income-related Employment and Support Allowance
- Pension Credit
If you moved from Universal Credit to Pension Credit, any time spent claiming Universal Credit will count towards the six months.
You'll also get it if you're on one of the above benefits and then another benefit such as personal independence payment.
The lowest amount you can borrow is £100. You could get up to:
- £348 if you’re single
- £464 if you have a partner
- £812 if you or your partner claim child benefit
How much you could get depends on whether you:
- can pay the loan back
- have savings of more than £1,000 (£2,000 if you or your partner are 63 or over)
- are paying back an existing Budgeting Loan or Crisis Loan
You can apply online or using a paper form.
Head to the government website here and follow the instructions: https://www.gov.uk/budgeting-help-benefits/how-to-apply.
A Budgeting Loan can help pay for:
- furniture or household items (for example, washing machines or other ‘white goods’)
- clothes or footwear
- rent in advance
- costs linked to moving house
- maintenance, improvements or security for your home
- travelling costs within the UK
- costs linked to getting a new job
- maternity costs
- funeral costs
- repaying hire purchase loans
- repaying loans taken for the above items
How do I pay it back?
A Budgeting Loan is interest-free so you only pay back what you borrow.
The repayments will be taken automatically from your benefits. The amount you repay is based on your income – including any benefits you receive – and what you can afford.
After you apply for a Budgeting Loan, you'll get an email, text or letter telling you if you’ve been offered a loan.
This explains how much your weekly repayments will be if you accept the loan.
You normally have to repay the loan within two years (104 weeks).
How do I apply for a Budgeting Loan?
If you claim old-style legacy benefits you can check if you're eligible for a Budgeting Loan on the government website.
If you're eligible you can apply online by visiting Gov.UK.
If you wish to fill in the form in paper format, you can download a SF500 form and return it to the address on the label.
After you apply you’ll be given a decision on your application. You need to accept the decision before you get your money.
If you apply online, you'll find out if you’ve been offered a loan within:
- Seven days if you get the decision by text or email
- 21 days if you get the decision by letter
If you apply by post, you'll get a letter telling you if you’ve been offered a loan within 21 days.
You’ll get your money within:
- Seven days of accepting the loan offer online
- 21 days of your loan offer acceptance being received by post
The money will then be paid into your bank account and you'll get a text message confirming this has been done.
How do I apply for a Budgeting Advance?
If you claim Universal Credit, you can apply for a Budgeting Advance in a number of ways.
Claimants can ask for a Budgeting Advance on their Universal Credit journal.
They can also apply over the phone by calling 0800 328 5644.
Otherwise, those on Universal Credit can visit their nearest Jobcentre and ask their work coach for the cash help.
What to do if you're struggling with debt
If you are looking for general help and advice to help you manage your debt, there are a number of charities and organisations that may be able to help:
You can contact National Debtline on 0808 808 4000.
An adviser will ask you about your income and spending, so try and have as much information to hand as possible when you call.
They will help you work out what you can afford to repay, and help you decide on the best solution for your debt.
Self-employed workers can also get help through Business Debtline.
Step Change can be contacted on 0800 138 1111.
It can talk you through different options such as debt management plans (DMP), individual voluntary arrangements (IVA), bankruptcy, and debt relief orders (DRO) if they are appropriate.
Citizens Advice is also available on 0808 800 9060.
It is a free and impartial service, and it can help you come up with a plan to getting on top of your debt, including which payments to prioritise and how to reduce your living costs.
The organisation's website has a useful page with advice on many aspects of debt, but you can contact it for more personalised help.
Local organisations may also be able to provide support in your area.
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National Debtline also recommends contacting organisation such as Mind, Samaritans and Anxiety UK if debt worries are affecting your mental health.
A benefits calculator can help you work if you might be entitled to extra cash.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
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