Paying off debts - deprivation of capital rules for JSA / HB

lulu99

I am working in a large organisation that will shortly be making 10% of their workforce redundant, and being one of the last in, with no qualifications and less experience than my colleagues, am in the firing line.

The company is offering a voluntary severance package of £32k tax free. However if I wait and am made compulsorily redundant I will get 2 weeks pay.

I owe about £23,000 (overdraft, loan, and credit cards, going back years) and currently pay out several hundred a month on these debts. So if I am made compulsorily redundant or forced into lower paid work I will be bankrupted. No ifs and buts here.

So I was planning to do the sensible thing and take voluntary severance and immediately use it to pay off my debts, and pay for a legal secretarial evening course which would give me a better chance of getting temp work while looking for a permanent job.

However I have just read about the JSA/HB rules which considers paying off debts in one go to be 'deprivation of capital'. My intention is not to claim benefits at all (JSA is not enough to live on, for a start!) and I am already registering with agencies in preparation for redundancy, but they all tell me that there is very little work around, and I am scared that without a safety net, I will be left homeless and destitute if I cannot find full time work. I am 45 and live on my own, have no support from anywhere else.

If I only pay off the minimum payment then the only winners will be the banks who will get thousands in interest off me each year, while the debts will hardly go down. And once the £30k was spent (two years max) I will be bankrupted.

Can anyone offer me any hope here? All I want is to keep a roof over my head and (ideally!) avoid bankruptcy.

karenx

Basicually if you are unemployed then you can make token payments to your debts of £1 per month untill you are back on your feet. And JSA/HB benefit would accept this. They wouldnt however accept that you spent 32k on paying off debts then expect to claim JSA and housing and council tax benefit. Over 16k of savings wont entitle to you to these.
So you should use the 32k for paying rent and normal bills etc and your token payment. once you are under 16k within a reasonable amount of time you can then apply for HB

healy

lulu99 wrote: »

I am working in a large organisation that will shortly be making 10% of their workforce redundant, and being one of the last in, with no qualifications and less experience than my colleagues, am in the firing line.

The company is offering a voluntary severance package of £32k tax free. However if I wait and am made compulsorily redundant I will get 2 weeks pay.

I owe about £23,000 (overdraft, loan, and credit cards, going back years) and currently pay out several hundred a month on these debts. So if I am made compulsorily redundant or forced into lower paid work I will be bankrupted. No ifs and buts here.

So I was planning to do the sensible thing and take voluntary severance and immediately use it to pay off my debts, and pay for a legal secretarial evening course which would give me a better chance of getting temp work while looking for a permanent job.

However I have just read about the JSA/HB rules which considers paying off debts in one go to be 'deprivation of capital'. My intention is not to claim benefits at all (JSA is not enough to live on, for a start!) and I am already registering with agencies in preparation for redundancy, but they all tell me that there is very little work around, and I am scared that without a safety net, I will be left homeless and destitute if I cannot find full time work. I am 45 and live on my own, have no support from anywhere else.

If I only pay off the minimum payment then the only winners will be the banks who will get thousands in interest off me each year, while the debts will hardly go down. And once the £30k was spent (two years max) I will be bankrupted.

Can anyone offer me any hope here? All I want is to keep a roof over my head and (ideally!) avoid bankruptcy.

Assuming that you have paid enough NI conts in the 2007/8 and 2008/9 tax years you will be entitled to contribution based JSA for up to 6 months. This is not means tested and it does not matter how much you have in savings. After 6 months any JSA paid will be means tested.

fluffymovie

I am not sure that I agree that paying off debts would be considered deprivation and I wouldn't necessarily say that this was so.

In some cases however, it would be.

For example, a claimant has an overdraft of £5000. They have capital of £20,000 and so are not entitled to HB. They have had these monies for years. If they suddenly paid off the debt and then claimed HB, I would possibly say that they have done this to claim HB and find them ineligible for deprivation.

However, if a change in circs leads to money you never had and that you have debts which you won't be able to meet from your new income, I don't think this would be deprivation.

in order to find someone having deprived themselves, we would have to show that we consider that they have done it to claim benefit and this wouldn't seem to be the case with you. In this case, you would be clearing debts from capital you had to help with the change in income.

Oldernotwiser

If you owe 23K and you get 32K you will have 9K to live off and as well as getting 6 months' contributions based JSA. Do you think that would keep you afloat financially for long enough to get some sort of job? In which case it could be a gamble worth taking, given the alternatives.

kingfisherblue

The OP mentions registering with agencies, who say that there is very little work around. Is that work in your particular field? Or are you willing to look for employment in another area? Even if these are temporary until you can get another job in your preferred area, it might be worth considering.

lulu99

Karenx - if I only pay back £1 per month then I will be put on a credit blacklist, and will never 'get back on my feet'. The banks would want their money as soon as I started working and I would be back at square one, facing a lifetime of poverty trying to pay it back. Bankruptcy sounds preferable to that!

My aim is not to claim benefits if at all possible - I will be looking for any kind of temp work (am not fussy so long as its local) as I want to avoid dipping into the rest of the cash. Would only consider claiming benefits if say, 4 months down the line, work dried up or has not been forthcoming.

If I got temp work then this dried up (as it has in the past, especially round xmas), could the DSS/HB still claim that I had intentionally deprived myself of capital if I made a claim 4 months later? Even though some of that capital will be used to help me find work? And even if I could show them evidence of intensive job-hunting?

nannytone_2

i do feel for you lulu, but the position youre in is what happens when you take more debt than you can afford to repay!

it's a really hard way to learn the lesson though. i hope everything goes well for you.

tigtag02

nannytone wrote: »

i do feel for you lulu, but the position youre in is what happens when you take more debt than you can afford to repay!

it's a really hard way to learn the lesson though. i hope everything goes well for you.

or you could have just said 'serves you right' :rollseyes: - seriously, when will these kind of comments stop on this board!!

OP - I agree with oldernotwiser and think the 'gamble' is worth taking. Maybe you could speak to the DWP and see what their opinion is?

Rothschild

WHy do you care so much about your debts??!


Juts get them written off, and use that 32k to buy yourself some luxury furniture and gadgets or holidays.

nannytone_2

i wasnt meaning 'serves you right' at all!
if someone learns from someone elses misfortune then at least someone is helped!