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Debt Solicitors
Budgeting Loan- interest free loan (14 February 2011)
Date: 14/02/2011
By Angela Rani
A common mistake our clients make is looking for a low interest loan to pay of existing debts without checking their entiitlement to an interest free Budgeting Loan from the social fund.
It aggravates me to see people who are already on low- income struggle to save their weekly ‘minimum’ allowance to pay back these loans.
What I find worrying the most are those clients who are in receipt of social security benefits and are in debt because they may have required money to buy basic furniture to furnish their home or have simply fallen into arrears with their household bills and then are made to pay more debt when they could have been entitled to an interest-free Budgeting Loan from the Social Security Fund.
The basic provision for a budgeting loan:
A Budgeting Loan is an interest free loan. It is available if you have been in receipt of income support, income-related job- seekers allowance, income-related employment and support allowance and pension credit for at least 26 weeks.
You can get a Budgeting Loan if you need help with repaying hire purchase (HP) or other debts due to:-
• furniture or household items,
• clothing and footwear,
• rent in advance or removal expenses to secure fresh accommodation
• home improvements,
• maintenance or security
• travelling expenses
• looking for or starting work which also include childcare costs
You can apply to borrow between £100 and £1,500. It is up to the decision maker to decide who should get a Budgeting Loan and how much they should get.
The Budgeting Loan from the Social Fund must normally be repaid within 104 weeks (2 years).
Budgeting loan is one of the alternative options for repaying a debt instead of taking out a low interest loan. There are other options to help you manage your debt such as Credit Union, Debt Relief Order and Community Care Grant from the Social Fund. The option you decide to take will depend on the amount and the type of debt you have.
Know your entitlement and know your rights. If you are a person on low-income and struggling with debt, find out which options may be available for you and let us help you manage your debts.