Recovery of overpayment

Client has IS overpayment of about £6K, which is being recovered by deduction from ongoing benefit.

Her sister has offered to provide a sum (probably about £2K) if it would be accepted by DWP in full and final settlement of the overpayment.

I’ve not had any experience of asking DWP whether they would accept a part payment in full and final settlement.  Has anyone any knowledge of whether DWP have ever accepted this?  Or do their regulations make it impossible?

DWP always has the option to exercise its discretion not to recover an (alleged) overpayment.  In my experience they hardly ever take that option unless the circumstances are truly exceptional.

In your client’s case they have already started recovery so I think it’s unlikely that they won’t carry on this way.

In the final analysis the DWP can eventually recover from the claimant’s State Retirement Pension or from their estate if they die before they reach retirement.  Why, then, would they consider accepting a reduced sum?

Assuming that the estate is solvent, that is, which means enough in it to pay all outstanding debts. this would not be one that took priority over the funeral costs or any secured loans, or any other normal debts. How many benefit claimants who don’t own a house have much to leave when they die? Unless of course they have been claiming when they had too much capital…which certainly happend in an estate I dealt with back in the day. He’d been claiming supplementary benefit (yes, it was before 1987) when the limit was £3,000 and had a very great deal more than that. I had the task of giving the family the bad news.

If the lump sum is part of pro rata offers to creditors, then if there is enough money it seems reasonable to treat DWP as a priority with a 100% payoff, and other unsecured creditors get a reduced settlement offer.

Banks etc usually only go for full-and-finals when it’s in their interests, because full recovery is unfeasible in a realistic timescale. The DWP has the luxuries of greater enforcement powers and less commercial need for a quick return. I can’t see anything in the ‘overpayment recovery guide’ that may give the DWP discretion for a partial settlement, unless separately to the lump sum becoming available there is exceptional hardship.

Even when direct deductions are not available:

1.47 Where the debtor;
a) has sufficient money, they are expected to repay the overpayment by a lump sum;
b) does not have the money, is not in receipt of benefit, and makes a reasonable offer to repay by regular payments, their offer of instalments is normally accepted;
c) refuses to repay, is not in receipt of benefit, and enforcement action is appropriate, the case is considered for enforcement action through the Civil Courts.

(.. and there’s no general way of getting the civil courts to order a partial settlement).

Out of interest, when a representative is dealing with an estate:

16.94 In some instances the PR may not wish to dispose of an asset(s) (e.g. a property considered to be the family home). Should they offer a lump sum part-payment from the estate, plus an instalment agreement that would clear the balance in a reasonable time, then this is normally acceptable.

I’ve been away & only just seen these replies.  Thank you for them - they strongly reinforce what I was thinking & I will let the client know.  Incidentally, this wasn’t part of a general full & final offer - the other debts had been dealt with by a DRO, but the DWP one couldn’t be included as it was due to fraud - which, in my view, would make the DWP even less inclined to accept a partial payment.