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What to do if you are struggling to repay benefit overpayments

Personal Debts

David Tannock - 5th March 2025 - 3 minutes to read

Fees apply. May not be suitable in all circumstances. Your credit rating may be affected.

MoneyHelper is a free independent service available to customers offering debt counselling, debt adjusting and providing of credit information services.

How to deal with benefit overpayment debt

If you have debt as a result of an overpayment of state benefits, you will need to make arrangements to pay this back to the government. You will be required to pay back any benefit overpayments which have been made to you in error or because they had the incorrect information about your financial and/or living situation.

Unlike other forms of debt, there is no time limit as to how long the government can chase you for repayment of benefit overpayments. While credit card and loan debt becomes statute barred after five years in Scotland, there is no such rule when it comes to debt which is as a result of an overpayment of state benefits. It is therefore of high importance that you put a plan in place to deal with this type of debt.

How to deal with a benefit overpayment

If you realise that you have been overpaid your benefits, you should set this money aside and contact the Department of Work and Pensions immediately so that the money can be paid back. While it may be tempting to keep the extra money until you are asked for it back, this is only likely to make the situation worse, particularly if you do not have the money at hand to repay the debt when requested.

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Can I be made to repay benefit overpayments back?

As there is no time limit as to how long you can be chased for benefit overpayment debt, simply ignoring the problem will not make it go away. The government have a huge amount of resources at their hand to chase those who refuse to pay back the money they have been overpaid in benefits.

If you are not able to pay back the benefit overpayment debt in one lump sum, you will need to arrange to repay in instalments. If you are still on benefits, the Department of Work and Pensions can take money directly from your future benefit payments in order to pay down the debt you owe them. If you are in employment, deductions can be taken directly from your wages, although they will need an attachment of earnings order to do this.

What to do if you cannot repay benefit overpayment debt

If you do not have the money to repay the money you owe in benefit overpayments, particularly if you are dealing with other forms of debt in addition, you may need to consider entering into a formal debt solution to deal with the problems you are facing.

By entering into a Trust Deed, you can include all your unsecured debts such as credit cards, personal loans, and benefit overpayments into one monthly payment. After four years any debt which remains will be written off.

In order to enter into a Trust Deed you will need to enlist the help of a debt advisor who will be able to talk you through your options and recommend the most appropriate course of action. At Scotland Debt Solutions, our advisors are perfectly placed to help you navigate the personal debt landscape and set you on the track to a debt free future. Contact the team today.

David Tannock

Debt Adviser

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Sequestration is the Scottish version of bankruptcy and may be suitable for you if you do not have the money to pay back your debts

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A Trust Deed involves making a monthly contribution to your debts for up to four years. After this time any remaining debt included in the Trust Deed will not need to be paid.

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