Can an IVA include overpaid benefits?
The simple answer is yes. If you have received an overpayment to your benefit entitlement in error, it can be included in your IVA and will be repaid through your IVA contributions.
It should be noted that any benefits claimed fraudulently will not be included in an IVA
Repaying Benefit Overpayments
If you've received a benefit payment which was greater than your entitlement, the government department responsible for giving you the overpayment will want their money back.
For some people, the act of repaying a benefit overpayment will be little more than an inconvenience, but for some, it will be much more problematic.
This is due to a common tactic used in the repayment of overpaid benefits, known as the 'claw-back' method.
This is when overpayments are drawn from current entitlements, thus reducing the benefit at source, which can have a devastating effect on some household budgets.
Using this tactic conveniently ensures the repayment of the government debt is given priority status by the very people it's owed to.
Overpaid benefits and IVAs
Under the terms and conditions of an IVA, all unsecured debts are treated the same.
So when an IVA applicant has been overpaid benefits, the debt is no longer allowed special priority status.
Instead, the debt is added to the list of debts to be repaid through the IVA, and the benefits themselves resume to the level of entitlement.
Child Tax Credits
Due to the complexity of the Child Tax Credits system, calculation errors and overpayments are not uncommon.
Fortunately, the IVA process enables the overpayments to be repaid through the IVA contributions, ensuring that the Tax Credits are once again reinstated to their normal levels.
Working Family Tax Credits
Similarly to Child Tax Credits, any overpayments received from Working Family Tax Credits will be included as a debt in the IVA.
The entitlement will then be reassessed, with any Tax Credit entitlement being reinstated and paid in the normal manner.
If you're experiencing financial problems and have recently been notified that you've received benefit overpayments, then give our helpline a call on 0800 856 8569.
Our professional IVA advisers will help you determine whether an IVA is a viable solution for you, whilst helping you to understand how an IVA might help you to regain control of your finances.
If you would like to talk to someone in complete confidence please call 0800 856 8569.