Would paying off a mortgage be considered 'deprivation of capital'?

Llyllyll

I haven’t ventured onto this particular forum before and won’t be doing so again, save to post this.

Despite Martin’s sticky thread re behaviours and opinions there are clearly still people posting judgements on others without knowing all the facts of their situation. Please refrain from doing so and only reply if you can add any value to the OP’s initial post.

For what it’s worth OP I would myself pay off the mortgage, good on you for trying to do what is, IMO, the right thing.

Those who state that doing so may be considered ‘deprivation of capital' haven’t provided any evidence to support that assertion. If they are able to, then I hope they will as it will give you some more information to base your decision on.

If you do decide to pay off the mortgage and it is considered ‘deprivation of capital' then you will, as far as I’m aware, be able to appeal it especially as it appears to be completely subjective and is down to the individual discretion of the decision maker on any given day.

HTH

Oldernotwiser

Llyllyll wrote: »

I haven’t ventured onto this particular forum before and won’t be doing so again, save to post this.

Despite Martin’s sticky thread re behaviours and opinions there are clearly still people posting judgements on others without knowing all the facts of their situation. Please refrain from doing so and only reply if you can add any value to the OP’s initial post.

For what it’s worth OP I would myself pay off the mortgage, good on you for trying to do what is, IMO, the right thing.

Those who state that doing so may be considered ‘deprivation of capital' haven’t provided any evidence to support that assertion. If they are able to, then I hope they will as it will give you some more information to base your decision on.

If you do decide to pay off the mortgage and it is considered ‘deprivation of capital' then you will, as far as I’m aware, be able to appeal it especially as it appears to be completely subjective and is down to the individual discretion of the decision maker on any given day.

HTH

Given the ignorance expressed in your post, it might be best if you stayed away from here, don't you think. Giving incorrect information is rather worse than giving an unwanted opinion!

HappyMJ

Llyllyll wrote: »

I haven’t ventured onto this particular forum before and won’t be doing so again, save to post this.

Despite Martin’s sticky thread re behaviours and opinions there are clearly still people posting judgements on others without knowing all the facts of their situation. Please refrain from doing so and only reply if you can add any value to the OP’s initial post.

Benefits and claiming is a sore point for many people. Just ignore it. My opinion in this case too is to pay the mortgage off leaving £6,000 in the bank then claim Income based JSA when the time comes. If it's denied which it may be then there is still £6,000 to live off. If it's accepted then pay the remaining balance off with the £6,000 in the bank.

Indie_Kid

A mortgage isn't classed as a priority debt. Therefore, no requirement to pay anything more than the minimum repayments each month.

tcr_3

zagfles wrote: »

The DWP can't have it both ways. Either it's available capital or it isn't. If they point to his £30,000 overpayment and say "that's deprivation of capital", then they can't complain if he uses that capital to live off!

Well, I'm not certain about that. And because of that uncertainty, I can't advise the OP to go down the road you suggest.

I'm not getting all leery on the subject, not falling out, it's just a genuine disagreement.

Jowo_2

sh1305 wrote: »

A mortgage isn't classed as a priority debt. Therefore, no requirement to pay anything more than the minimum repayments each month.

Are 'priority' debts defined as such to help debtors understand which to pay first and which ones they should postpone or negotiate lower payments. In other words, priority debts are related to debt repayment strategies to help those with creditors manage their repayments - could it be that this definition is separate from the benefits system and shouldn't be wrapped into Deprivation of Capital issues?

But nonetheless, the DoC area is very complex and the guides that have been produced for the decision makers who review benefits claims do contain some guidance about those who pay off their debts.

It's still up to the authorities to have to prove the individual knowingly got rid of their capital to improve their benefit claims.

Here's the HMRC decision makers guide to help the OP understand how they would be judged from a tax credit point of view. The OP should read through the entire guidance to get the complete picture.

http://www.hmrc.gov.uk/manuals/dmgmanual/html/DMG41001/09_0201_DMG45035.htm

For example, it says "If a person uses capital to repay a debt, the decision maker should consider carefully whether the debt had to be repaid at this time. If there is no legal obligation or pressure to repay the debt now, part of the purpose may have been to get benefit or more benefit..Applicant's or partner's have no choice if they use their capital to pay
1) for the necessities of life, such as food and fuel or
2) debts which are...immediately repayable and...legal debts capable of enforcement

Applicant's or partner's have a choice if they
1) give their capital away
2) spend their capital extravagantly or imprudently even if they say they have used it to pay for the necessities of life
3) pay back a debt before the agreed date, such as when they pay off their mortgage and the agreement says it is not due to be repaid for another 15 years
4) pay more than the amount due on a debt , such as when they pay more than the minimum payment on a credit card debt
5) pay back a debt which is not legal and incapable of enforcement.

*******

Here is one of the DWP many guides for its own decision makers on capital and how it can affect their means tested benefits.

http://www.dwp.gov.uk/docs/hbgm-bw1-assessment-of-capital.pdf

"The following are further examples of when a person may have deprived themselves of capital a lump sum payment has been made to someone else, for example as a gift, or to repay a debt...

When capital has been used to repay a debt give careful consideration as to whether the debt needed to be repaid at that time. If there was no legal obligation to do so then it may be that

part of the claimant’s purpose was to obtain or increase the amount of benefit."

tcr_3

Llyllyll wrote: »

I haven’t ventured onto this particular forum before and won’t be doing so again, save to post this.

Despite Martin’s sticky thread re behaviours and opinions there are clearly still people posting judgements on others without knowing all the facts of their situation. Please refrain from doing so and only reply if you can add any value to the OP’s initial post.

For what it’s worth OP I would myself pay off the mortgage, good on you for trying to do what is, IMO, the right thing.

Those who state that doing so may be considered ‘deprivation of capital' haven’t provided any evidence to support that assertion. If they are able to, then I hope they will as it will give you some more information to base your decision on.

If you do decide to pay off the mortgage and it is considered ‘deprivation of capital' then you will, as far as I’m aware, be able to appeal it especially as it appears to be completely subjective and is down to the individual discretion of the decision maker on any given day.

HTH

Hi there,

I don't doubt you sincerely hold those opinions & think your advice is best for the OP. But some of us have taken the DWP's Shilling over the years, some of us have worked in Welfare Rights or the CAB, perhaps that's why we're a wee bit more cautious than you & others here.

You'd have the OP pay his mortgage off.

You know, I've seen with my own eyes people pay their mortgages off, then be done for deprivation of capital. I saw one guy have his endowment policy mature 7 years before his mortgage was due to be paid off ... and he used that money & did what you advocate here ... he paid his mortgage off in a oner.

And the result ? He was nilled for means tested benefits, of all kinds, for 20 months. It was only when his "capital" had theoretically reduced to under £16k that he qualified for anything ... and he had to survive on reduced rate benefits with tariff income applied for another two years after that.

Now, you say the OP will have the right of appeal. Well, so did that guy I knew. And he lost his appeal. 20 months without benefit. 20 months. Think about it.

How would you have advised that guy ? He didn't have the luxury of claiming back overpayments, as the OP does ... he'd done as you've just advised and paid his mortgage off in full. How would you have advised him to feed himself, clothe himself, keep himself warm ... with no benefits of any kind whatever ?

I see Jowo's kindly posted links to the DMG. OP, please look through that guidance and seek professional advice before you make any decision. It's too important to get wrong.

Macro_3

The important thing with deprivation of capital is that the decision maker needs to show that one of the reasons (even if not the main reason) that the claimant spent their capital was to become entitled, or increase their entitlement to benefit - the key is the intent.

Deprivation cases in circumstances like this are seen quite commonly, but it is difficult to show that a motivation behind spending the money was to increase entitlement.

Incidentally, I wouldn't suggest paying some off and saving £6000 - it's a strange amount to leave in the bank and would actually suggest intent to me.

There is no black and white answer, you may just have to make your decision one way or another and see what happens.

[Deleted User]

smyffie wrote: »

So does that mean I will only be able to pay the minimum payments from credit cards that I use for as many day to day living expenses as possible (in order to make full use of the cashback facility)? Whereas currently they are paid off in full every month.

to avoid that being a problem i make the payment as soon as it hits the cc billing online
e.g spend on cc £100 2nd january,pay the £100 off on 5th jan.

HappyMJ

woodbine wrote: »

to avoid that being a problem i make the payment as soon as it hits the cc billing online
e.g spend on cc £100 2nd january,pay the £100 off on 5th jan.

You don't have to do that. If a CC is traditionally paid in full every month and can be easily proven by the previous statements there is no requirement to now switch to minimum monthly repayments. If I did that I'd have been saving nearly every penny of JSA as everything I spend goes through a CC for the cashback. I even pay the rent on a Credit card so would also be saving the Housing Benefit as well and only paying back 3% each month.