I was contacted by a client who had received a letter from DWP about a social fund debt from 1992. Cl was not sure what this relates to as he has never been notified about this debt before but he was on benefit for at this time and does not rule out having made an application to social fund. However he is now in full time employment. DWP were threatening legal action. However could debt be time barred? I have found info on overpayment of benefits which suggests that DWP would have 6 years from date of decision about overpayments to take legal action however I cannot found whether this would apply to repayment of crisis loan or budgeting loan. Anyone had any experience of this?

I've only got access to a First Edition of Trevor Buck's book of Social Fund Law and Practice, but this, at least, states :

'other methods of recovery include civil proceedings against the applicant for the recovery of the debt, subject to a six-year limitation period (five years in Scotland)...'

It may have been overtaken by events as it was published in 1996 - but I can't see how. Anyone got the more recent version?

Time limits are contained in the Limitation Act 1980, which, as far as I am aware, has not been amended to the contrary as regards certain civil debts, which I would class social fund loans as. Time limit for recovery of social fund loans in my opinion is 6 years from when the cause of action accrues. In other words, from when the debtor is first able to take legal action for default, or at the final decision of a court of first instance or appellate court (if used).

Doh! For debtor please read creditor.

I know this is desperately clutching at straws but what about the scenario of a client who is currently in receipt of income support and in feb 2004 receives a letter from the local social fund section stating deductions will be made from his income support for crisis loans and budgeting loans dating back to 19990 and 1991.
Has anyone got any thoughts or theories on the above in terms of the time span involved from the perspective of getting them written off or the debt be time barred (i do recognise the distinction between this scenario and the original posting scenario).
yours in hopeful anticipation.
andy

You need to distinguish between recovery from benefit and recovery throught the court. In your case, I believe that social fund does not limit or prescribe in terms of recovery from another benefit. Buck gives this opinion when he states that "another option to court action would be simply to defer recovery until the applicant becomes entitled to another benefit from which recovery can be made".

As far as being time-barred or prescribed in Scotland for court action, I think that this will still have to go through the courts for a definition of what a social payment actually is. If it is an overpayment of benefit, then the same rules would apply as any other overpayment; if it is actually a loan, because an offer is made and accepted, then it would definitely time-bar or prescribe. The problem may be whether or not the recipient has actually contracted with the DWP for a loan or is the money something else.

The Mulvey case has been changed in the Inner House Court of Session to say that social fund can be recovered from a sequestrated claimant while they are still on benefit but specifically and pointedly did not comment on how the debt should be treated if no benefits are involved, i.e. is it just a claim to the bankrupts estate or whether it has some special status.

Sorry to state the obvious but putting on my old debt adviser's hat it's really important that if your client receives court papers for this debt he/she has to defend it entirely on the N9(B) and MUST raise the Limitation Act defence in the N9(B) or it will not be considered. Case then transferred to debtor's local court and oral hearing arranged.

Without any actual court action he can just tell them to whistle for it.

(If in England and Wales)