Tell a bank not to use benefits to pay off an overdraft

Overview

You can tell your bank not to take your benefits payments to pay off an overdraft.

This is called a 'first right of appropriation of funds order'.

This is a temporary measure to allow you to pay essential bills, such as your rent, gas or electricity.

You can use the 'first right of appropriation' on any money being paid into your account.

For example, you may want to make sure that your Job Seeker's Allowance (JSA) is used to pay your electricity bill and water rates.

How to tell your bank

You need to write to your bank at least 7 days before your payment is due.

You should keep a copy of your instruction to the bank or building society.

You may want to ask your bank / building society to confirm in writing that they have acknowledged your instructions.

Example 1

A payment of (amount) will be paid into my current account number (account number) on (date).

The account is currently overdrawn. However, I need the money to meet my living costs, utilities and rent payments over the next week.

I'm giving you notice that I intend to use the 'first right of appropriation' to reserve the (amount) for this purpose and will withdraw the sum of (amount) on (date) to do so.

I'll contact you separately to make an arrangement to reduce my overdraft.

Yours faithfully,

(Your name)

Example 2

On or around 20 August, and every 2 weeks after, my housing benefit will be paid into my current account number (account number).

The account is currently overdrawn. However, I need the money to meet essential bills.

I'm giving you notice that I intend to use the 'first right of appropriation' to reserve the payment to pay the following items:

£75 standing order payable to my landlord, Mr Smith on the 25th of the month
£25 direct debit to pay my electricity bill, from (company), on the 1st of the month

Yours faithfully,

(Your name)

If there is money left over

If there is any money left over, the bank can use this to pay other items.

You should cancel any items you no longer wish to pay, or which you cannot afford.

You cannot cancel payments from your account to re-pay a loan with the same bank.

If you need advice or help

If you need advice, or if you need help with debt, call the Welfare Support Team on 0191 424 6040 (Monday to Thursday, 9am to 5pm, and on Friday, 9am to 4.30pm).