Social Fund Loans are called Loans,but strictly speaking aren't and instead are seen as payments in lieu of benefits.
Normally, whenever I am assisting a client to go bankrupt, we always include them, which is good practice, and from speaking with Insolvency Practioners I believe the DWP can't recover the loan during the bankruptcy from earnings etc (as this would be unfair preference) but like overpayments they can continue to be deducted from benefits.
You could contact the Accountant in Bankruptcy Helpline in Edinburgh on 0845 7626171.
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