Written by: Cally Worden
When you’re struggling on a low income, or perhaps trying to get by on benefits alone, the regular round of bills landing on the mat can feel overwhelming. Money management is not always easy, and not everyone has ability to keep tight tabs on their finances all the time. This can easily lead to debt. If you could use a little support in this area then it may be worth looking at how your benefits payments can work for you. Here’s what you need to know.
Third Party Deductions
Many of us owe money for the basic utilities – water, gas, electric – most of the time. Unless you’re on a prepayment meter you use the energy or water and then receive a bill. Other regular payments you have to make may include rent and other service charges. If you find that you are struggling to pay these types of bill, or have accrued debts with a service provider that you are finding it hard to repay, then you may be eligible to apply for Third Party Deductions.
These are essentially payments that are deducted from your benefits before you receive them, and paid directly to the individual or organisation that you owe money to. In this way the benefits systems helps you to manage your money by ensuring that your essential payment obligations are covered. It can help you to repay debts in a steady and structured way, and also to build up a fund for payment of future bills.
What Benefits Can Be Used?
Only certain types of benefits qualify for Third Party Deductions. The ones that can be used are:
- Income support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Child Tax Credits
- Pension Credit
When you Can’t Use Benefits
There are a few circumstances under which you are not able to tap into your benefits to help you pay your bills. Along with the specific types of benefits excluded, the other blocks on using them are as follows:
- When you want to pay off a debt that accrued with a previous landlord or supplier of services
- When you want to pay off debts with more than 3 organisations or individuals – if, however, you are wanting to apply deductions towards current (not overdue) bills, then you may request that more than 3 be set up
How Much Will be Taken?
Every time your benefits are paid an amount of at least ¬£3.65 will be taken from each benefit amount and used to pay off the debts that you may owe, with a portion being put towards a fund that can be used to cover bills in the future. The precise amount is normally decided by the Jobcentre Plus, or your Pension Centre, and will depend on the amount of your debts, and predicted future needs.
Third Party Deductions that do not amount to more than 25% of your total benefits may be arranged without your consent to the amount, but you will be advised of the precise value of deductions that will be made, and if these are going to change. For planned deductions in excess of 25% you will be asked for your agreement.
Applying for Third Party Deductions
Your application for Third Party Deductions is managed by either the JobCentre Plus or your Pension Centre (depending on your circumstances. To apply you will need to supply details of how much you owe, and who to, along with your customer reference number in each case (for bills), and your National Insurance number. The JobCentre or Pension Centre will then contact the organisation or person who is owed money and arrange the Third Party Deductions payments on your behalf. They will then explain to you what has been agreed, and how and when your bills will be paid.