DWP pauses deductions from benefits to recover loans under the Eligible Loan Deduction Scheme

Department says temporary change because of COVID-19 will remain in place until at least July 2020

The DWP has paused making deductions from benefits to recover loans under the Eligible Loan Deduction Scheme.

Having already paused recovery of benefit overpayments for three months in response to the coronavirus (COVID-19) outbreak, the DWP advises that it is adopting a similar approach to benefit deductions to recover loans that meet approved responsible lending criteria under the Eligible Loan Deduction Scheme.

NB  - the Scheme is a joint DWP and Treasury initiative to support the expansion of affordable credit to people on low incomes to help reduce financial exclusion - lenders can apply to the DWP to recover loans from benefits paid to claimants where the loans meet approved responsible lending criteria, have fallen into arrears, and have repayment arrangements that have broken down.

The updated guidance on the Scheme confirms that claimants -

‘… do not need to make any repayments until July 2020 at the earliest. Payments will stop automatically and restart in July at the earliest.’

For more information, see Eligible Loan Deduction Scheme from gov.uk