What happens if you don't repay a housing benefit overpayment
If you are having financial difficulty, Citizens Advice or National Debtline can tell you your rights and options.
Late payment reminder
If you do not pay, or if you pay late, we will send you a reminder. The reminder shows how much money is outstanding and when you need to pay it by.
If you continue to miss payments or pay late, we can take action against you to recover the debt.
Debt recovery action
There are a number of ways we can reclaim your housing benefit overpayment with or without making an application to the courts:
Deducting the overpayment from your salary
We can ask your employer to deduct any housing benefit overpayments you owe us from your salary. This is called a direct earnings attachment (DEA).
If we decide to do this, we will write to your employer and ask them to deduct the payments. The amount deducted from your salary will depend on how much you earn.
Using a debt collection agency
We use external debt collection agencies to act on our behalf to collect overpayments that you haven't repaid. The debt collection agents will try to recover the housing benefit overpayment by letter, telephone and doorstep collection. The agents will aim to recover the full amount, but they are also authorised to set up and manage payment arrangements.
Applying to the courts to make you bankrupt
We can apply to the court to petition for you to be made bankrupt if your debt is more than £5,000.
Bankruptcy is a serious matter. If you become bankrupt:
- you will have to give up any possessions of value and interest in your home
- your credit rating will be affected
- you will find it harder to get a loan or credit cards
- any business that you run will almost certainly be closed, and your employees dismissed
- certain restrictions will be imposed on you.
Using proceeds from the sale of your home
If you own your home, we can place a charge on your property. When you sell your home, the overpayment will be paid from the proceeds of the sale.
We will make an application to the county court for a charging order and add the costs of making the order to what you owe us.
Once we make an entry at the land registry confirming that the debt has been secured, you cannot sell the property without paying the overpayment first. We will also claim statutory interest.
You can still make payments to reduce the debt. If you pay the debt in full, including costs, we will remove the charge.
Collecting money from your employer
If you are employed, we can collect your housing overpayment directly from your employer.
This is called an ‘attachment of earnings’. We will only enforce an attachment of earnings if you have defaulted on at least one of your payments, owe more than £50 and are not:
- unemployed or self-employed
- a firm or a limited company
- in the armed forces
- a merchant seaman.
Collecting goods from your home or business
A warrant of execution gives court enforcement agents (formerly known as bailiffs) the authority to take goods from your home or business.
The court enforcement agents will try to either collect the overpayment or seize goods to sell at auction and then pass the money on to us.
Before the court can issue the warrant, you must have failed to pay the amount you have been ordered to pay, or fallen behind with at least one of your payments.
An enforcement agent cannot always remove and sell your goods. For example, they cannot remove essential household items and tradesman’s goods, or goods subject to hire purchase or rental agreements. They also cannot remove any item that has already been seized by bailiffs acting under another warrant. The enforcement agent will deduct the costs of taking goods and selling them at auction.
Freezing your bank account
A third party debt order is usually made to stop you taking money out of your bank or building society account. The overpayment owed is then paid to us from the account.
We can apply for a third party debt order any time after we have registered the debt at court. The court will grant the order if you have failed to pay the debt when it was due, or failed to make one or more agreed payments.
We cannot apply for a third party debt order against a joint bank account unless both parties are liable for the debt.
When the bank or building society receives the court order, they will freeze the account immediately.
Covering the cost of court action
Any court action will result in us charging you additional fees and interest on your overpayment balance.