debt

we want to help taiohi avoid being in debt

back to supporting yp, ypp and young partners
Sometimes young people become in debt to MSD. It's important to help them avoid getting into debt where you can.

When they have a debt to MSD the repayments will be taken from their benefit payment.

how young people get into debt

A young person can become in debt to MSD from a recoverable hardship payment or from an over payment of their benefit. 

Recoverable hardship payments are Advance Payments of Benefit and Special Needs Grants that young people need to pay back. Things young people can get a  recoverable hardship payments for include whiteware, glasses, furniture and clothing. 

Over payment of benefit can happen for a variety of reasons, including when the young person:

  • doesn't tell MSD about their income on time 
  • transfers between benefits
  • has a changes of circumstances that effects their payments. 

helping young people avoid debt

To help young people avoid creating or increasing their debt to MSD, you should:

  • let young people know what they need to tell MSD and when 
  • make sure young people have regular entitlement and need assessment checks
  • give young people good advice, and make appropriate referrals to support services when they ask for help
  • discuss other options young people may have before they incur debt
  • consider the long-term impact on the young person when recommending a recoverable assistance
  • prevent overpayments by processing review actions promptly
  • negotiate a recovery rate that is appropriate for the young person.

rate of recovery

When setting the rate of recovery, you need to consider:

  • the amount of the debt – we want young people to pay off their debt as fast as they can, without placing them in undue hardship
  • the effect of the rate and method of recovery on the young person's ability to support themselves or their dependents
  • the effect the rate of recovery will have on the young person's ability to meet their youth activity obligations.

If the young person does not agree with the rate of repayment, you must tell YSSU.

reducing existing recovery rate for recoverable assistance

A Recoverable Assistance Payment needs to be repaid within 24 months unless there are exceptional circumstances.

Housing Support Products are not required to be repaid within 24 months, however an appropriate rate of recovery must be set.

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