DWP Budgeting Loan advice needed

[backofbeyond]

Just wondered whether anyone can confirm whether crisis loans are taken into account when issuing a budgeting loan? I know that social fund loans are and I presumed that crisis loans come under this category but when my husband called today he was told that crisis loans are treated separately. Call me skeptical but I just wanted a second opinion.

 

Just a little bit of background info for anyone who can advise - until Jan this year we have never claimed any social security benefits but I lost my job and at the same time got issued with a tax credits overpayment (that's another story!) and my husband and I had to claim job seekers allowance (he previously cared for our 2 children whilst we worked). Because we struggled financially til any money came through we had 2 crisis loans which we are currently paying back through job seekers. We have now decided that we want to apply for a budgeting loan to clear some of our doorstep debts which we are paying extortionate interest on and also to buy school uniforms for the next school year.

[ErikaPNP]

The answer is both yes and no, and it's difficult to explain. Crisis loans are always taken into account as they come out of the same budget as a budgeting loan does but being taken into account doesn't mean it will affect your chances. They are only taken into account for Social Fund debt purposes, nothing else.

 

Crisis loans are counted in the total social fund debt but not the budgeting loan debt, however if they are high enough they can still prevent a budgeting loan from being awarded. The Social Fund debt limit is £1500. Once you reach this debt limit, the Social fund cannot award any further loans until some of it is repaid. The budgeting loan limit is within that £1500 but there is also a maximum cap on what a budgeting loan can pay, depending on your circumstances. Any budgeting loan debt you have will reduce that amount and any other Social Fund debt could also reduce it.

 

From what you have posted, you are a family (you have children living at home that you are responsible for) which allows you to claim up to £812 on a budgeting loan. They cannot pay less than £100 on a budgeting loan.

 

Examples:

If you had no Social fund debt, it's likely you'd get the £812.

If you had budgeting loan debt of £200, they could only offer you up to £612

If you had crisis loan debt of £200, you'd still likely get £812 on a budgeting loan as the budgeting loan award would not take you up to the total limit of £1500.

If you had crisis loan debt of £768, the maximum they'd be able to award on a budgeting loan would be £732

If you had £1402 of crisis loan debt, you wouldn't get a budgeting loan because the amount left from £1500 would be under £100.

 

Like I said, it's a bit difficult to explain in text. If I've confused you more, tell me how much the crisis loans add up to, and I will be able to tell you the maximum they could consider you for on a budgeting loan.

 

Social Fund debt can affect the amount they can consider for award but they ask you on the form about other debts for a different reasson. It's important you tell them about other debts because if you are repaying other debts this can reduce the rate of repayment for the budgeting loan, making budgeting easier for you.

[backofbeyond]

Thanks Erika I think that makes sense. I think we owe £598 which is made up of 2 crisis loans, one was for living expenses until benefits came through and the other was for a washer (don't know if they are classed as two separate things).

 

P.S yes we are married with two daughters (5&6) x

[ErikaPNP]

At £598 debt, you'll be eligible for up to £812 on a budgeting loan. Have you checked the other eligibility criteria? For example, has your JSA been income based for the duration of your claim, or have you at some point since January claimed contributory based JSA?

 

The washing machine is a Crisis loan for household items. These were discontinued from April this year, though they can still consider household items on a crisis loan if there has been a disaster such as a flood. The other Crisis loan is known as an 'alignment to benefit'.

[backofbeyond]

It has always been income-based job seekers allowance. Everything happened at once for us (doesn't it always?!) but basically we had a tax-credits over-payment and then I lost my job. My husband went to the job centre and because he has been looking after the children he hadn't made enough contributions for contribution based job seekers allowance. He first made the claim (by telephone) on 31 January 2011 and his first signing date was 14 Feb. By my workings out this means that 26 weeks should be taken from the date of the phone call and will be 01 Aug?

[backofbeyond]

Just to update we were eligible for £810 and have received the payment.