Universal Credit has replaced a number of means tested state benefits and was first introduced in 2013. The idea was to simplify the benefit system as a whole, but in reality, this change has the potential to cause serious financial problems for those claiming.
Sometimes Universal Credit payments are frozen or temporarily suspended by the Department for Work and Pensions (DWP) – whilst they work to resolve a dispute or anomaly in the payment amount, for example.
When this happens it can cause severe financial issues for claimants, leading to problems in paying priority bills, such as mortgage, rent, and Council Tax. So what happens if Universal Credit is frozen in Scotland, and are there any sources of emergency cash for people experiencing a sudden loss of benefit?
If you’ve experienced financial difficulties because of the coronavirus pandemic, you may be entitled to a Tenant Hardship Loan. This offers emergency cash to eligible Scottish tenants in rent arrears.
If you’re entitled to a loan under this scheme, it could protect you from eviction by your private or local authority landlord. Loans are interest-free and offered over a five-year term, but no repayments are needed for six months.
The Tenant Hardship Loan Fund isn’t available to people receiving state support, but if the Department for Work and Pensions freeze your Universal Credit and then decide you’re no longer eligible to claim, it may be an option.
A comprehensive welfare system is in place in Scotland, including help with housing and heating costs, and accessible finance in emergency circumstances. The Scottish Welfare Fund may help if your Universal Credit payments are frozen and you cannot pay your priority bills, feed your family, or provide a warm home for them.
These are just a few potential sources of financial help available under the Scottish Welfare Fund:
You can obtain specialist insolvency help from a number of sources, including licensed insolvency practitioners (IPs) and debt charities. Wherever you seek professional support, however, you should be offered a free initial consultation so that your situation can be quickly assessed. These are just two possible procedures that could help:
Debt Arrangement Scheme (DAS)
You may be eligible for the Debt Arrangement Scheme if you can repay your debts over a longer time. A key benefit of DAS is that creditors can’t take legal action against you. A licensed IP or money advisor sets up a debt payment plan after negotiating with your creditors - if you owe £5,000 or more it may be a good option.
Scottish Trust Deed
A Scottish Trust deed usually lasts for four years. It differs from the Debt Arrangement Scheme as you only repay a proportion of the debts you owe – potentially, you could write off up to 90% of your debts with a Scottish Trust Deed.
If you live in Scotland and your Universal Credit payments have been frozen, please get in touch with our specialist team at Scotland Debt Solutions. We can offer you a free, same-day consultation to quickly assess your situation and present the best options.
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If you have money left over at the end of the month, you may be wondering how best to use it. Should you pay off your debts, or is saving a better option? You might even be considering both.
Our Scottish based team can help advise you on your debt problems.