Redundancy & Debt

SHAMALI

I'm 57, live in a council house have a chunk of personal debt and am under threat of redundancy. If I paid off all my debt I would still have a couple of thousand left, would I be able to claim benefits, housing, employment etc till I could get another job?

Emmzi

no, you would be assessed as if you still had the pay out

suburbanwifey

SHAMALI wrote: »

I'm 57, live in a council house have a chunk of personal debt and am under threat of redundancy. If I paid off all my debt I would still have a couple of thousand left, would I be able to claim benefits, housing, employment etc till I could get another job?

Redundancy pay cannot not be used for frivolous expenses...you can use it to pay off debt, but you must save the receipts to show where you paid it to and why.

When you get your redundancy payment, pay off those debts immediately and keep all receipts to show the payments and the debts. When you claim they will ask you where the money went, tell them to pay debts and they will ask you to show receipts for the debts. You will still be able to claim benefits.

Anyone tells you differently on here, they are wrong, I know someone who was made redundant and they did just this. They didn't ask if they could, they just paid off their few credit cards bills and a loan. The benefits agency asked for copies of the debts they paid (they had to post them off) and they were fine about it.

If you ask them before you do it, they will say no, you have to keep the money to live on.

Forgot to add: They will assess you on the remainder of the money left after you have cleared debts. But there is a limit you are allowed to have before it affects your benefits, I am not sure entirely what this figure is, someone else may know.

Emmzi

one example

http://www.northumberland.gov.uk/default.aspx?page=7613

If the benefit office thinks you have spent capital or savings to help you get more benefit
In this case they can treat you as though you still have the money - called notional capital. This rule may apply even if you use the money to pay off a mortgage or debts.
If you claim a benefit and it is refused or you get paid a reduced amount because of this rule it is important to seek advice.

another example

http://www.newcastle.gov.uk/core.nsf/a/wr_y+b_redundancyandbenefits


If the benefit office thinks you have spent capital or savings to help you get more benefit

In this case they can treat you as though you still have the money - called notional capital. This rule may apply even if you use the money to pay off a mortgage or debts.
If you claim a benefit and it is refused or you get paid a reduced amount because of this rule it is important to seek advice.

another example
http://www.south-ayrshire.gov.uk/welfarerights/redundancy.aspx

If the benefit office thinks you have spent capital or savings to help you get more benefit
In this case they can treat you as though you still have the money - called notional capital. This rule may apply even if you use the money to pay off a mortgage or debts.

suburbanwifey

Paying essential bills or debts which you will not be able to pay once you have lost your job, is not deliberate depreciation of capital and it is allowed. All the poster has to do is prove that is what he spent the money on, by showing receipts for the debts he cleared.

If he phones and asks they'll say no, as they try to stop you doing that to force you to live on the money (fair enough!) but I know someone who did just that and when questioned as to why they replied and when asked to supply receipts they supplied. It did not affect their housing benefit, their council tax benefit or their unemployment allowance that was granted upon redundancy. Fact.

dmg24

Emmzi's info is much more accurate than suburbanwifey's tale of what her cousin's cousin's neighbour's mate did. This is a very dangerous area to give bad advice on, as if the OP spends their savings and is then found to have intentionally deprived themselves, they will be treated as still having the money and so will not receive any means tested benefits.

The general rule is that any spending on arrears, especially relating to priority debts is allowed. Other than this, it is down to the Decision Maker to decide if the claimant has spent the money in order to claim benefits.

Anyone intending to spend large amounts of capital whilst on means tested benefits should get written agreement from the LA/ DWP before doing so.

suburbanwifey

dmg24 wrote: »

Emmzi's info is much more accurate than suburbanwifey's tale of what her cousin's cousin's neighbour's mate did. This is a very dangerous area to give bad advice on, as if the OP spends their savings and is then found to have intentionally deprived themselves, they will be treated as still having the money and so will not receive any means tested benefits.

The general rule is that any spending on arrears, especially relating to priority debts is allowed. Other than this, it is down to the Decision Maker to decide if the claimant has spent the money in order to claim benefits.

Anyone intending to spend large amounts of capital whilst on means tested benefits should get written agreement from the LA/ DWP before doing so.

You are perfectly right in your advice.