West Lindsey District Council reclaimed more than £400,000 in overpaid housing benefit from claimants, which charities say could push them dangerously into debt.
Turn2Us, which helps people in financial hardship, warned that recovering funds paid in error could have a “snowball effect”, putting people at risk of serious poverty and impacting their mental health.
The latest figures show that, in the nine months to September, housing benefit claimants had to pay back £451,000 to West Lindsey District Council from overpayments.
Matthew Geer, campaigns manager at Turn2Us said: “A benefit overpayment can happen for many reasons. It’s often something as simple as a DWP error or a small unreported change in circumstances.
“However, we are seeing that overpayments can have a real snowball effect on some claimants which often results in people falling into more severe debt and being harassed by bailiffs.
In West Lindsey, the bulk of the money reclaimed, £451,000, was to housing associations or private tenants.
A spokesman from West Lindsey District Council said: “West Lindsey District Council attempts to recover overpaid housing benefit direct from the claimant where possible at the standard national rate of £11.10 per week but where a claimant is suffering hardship and struggling financially this amount can be negotiated and a more appropriate recovery amount can be agreed for a period of time.
“The calculation and reason for any overpaid housing benefit is provided to the claimant in writing along with their right of appeal against the overpayment decision.
“The majority of housing benefit overpayments occur because the claimant either delays reporting a change in their circumstances or does not report the change at all and it is discovered several weeks or months later which is why it is extremely important for all Housing Benefit recipients to contact the Benefits Team.”