income-based JSA & Reducing Savings by overpaying the mortgage prior to claiming

cabbagebrains

Hope someone here might be able to offer some advice, the official info on this is virtually non-existant, and I am unsure where we stand?

My partner is due to be given redundancy notice in the next few weeks. (I am self-employed, but earn virtually nothing, so will also need to find a normal job). He will be out of work from about the beginning of April (if nothing found in the meantime).

I am anticipating the worst & expecting we will be out of work for some time and intend on claiming the income based jobseekers benefit. But we currently have savings, which will be over the threshold for this if adding the amount we intend to save this & next month too.

We have built these saving up over the last 5 years as we have an interest-only mortgage, and always intended on paying off as much as we could after the fixed rate deal ends at the beginning of this march, and we can do so penalty-free.

If we do this as planned, reducing our savings to just what we will have from his redundacy pay, will we still be able to claim jobseekers? Will they need to see our prior bank statements? And will it matter that we did this a month before attempting to claim benefits?

I am also worried that if we do this & some way it makes us uneligible for any benefits, we won't have access to any savings either & hence no money at all to live on.

Thanks in advance for any info/advice?

Pigletto

I think that they ask for 3 months worth of Bank statements. At least they did when I had to be on JSA for awhile. They would want to know where the money has gone and they could make the decision that you have deliberately spent the money in order to claim Benefits. Which is exactly what you are suggesting you want to do.

Remember if he was paying NI in 08/09 and 09/10 then when it comes to being made redundant in April he will be able to claim contribution based JSA for 6 months and this is not affected by savings.

DaisyFlower

Why do you plan to be on income based benefits, theres at least two full months before his finish date to start the job search then 6 months contributions based JSA - after that income based. Surely one of you will be working within that 9 month period.

Then once either or you gets a job you can use any remaining savings towards your mortgage anyway and have the benefit of them during the lean period of JSA.

cabbagebrains

I know he could claim contribution based, but it would be significantly less as we couldn't claim as a couple. (I think that's right). And also wouldn't be able to claim SMI if we couldn't find work for a long while.

It seems sensible to us to pay the money off & reduce our debt, but I can see how it could be seen the other way.

So how would the alternative work? Do we just use the savings to pay the mortgage & bills & then apply for JSA when we have less that the maximum savings left? Wouldn't this still show we reduced our savings on purpose? And if we do this we would still be reducing our savings each month as benefits wouldn't cover the bills, so would we have to inform them every month that we have less savings than last month?

Jowo_2

Google 'deprivation of capital' to understand the impact of your plans when it comes to claiming means tested (income dependent) benefits. This can cover scenarios where a claimant has paid off loans/debts early where there is no legal obligation to do so, such as a court order. You should be able to uncover very rent threads on this specific topic which will have links to the DWP decision makers guide (the manual the DWP staff use for guidance).

Indie_Kid

cabbagebrains wrote: »

So how would the alternative work? Do we just use the savings to pay the mortgage & bills & then apply for JSA when we have less that the maximum savings left? Wouldn't this still show we reduced our savings on purpose?

That depends if you pay off the minimum repayments or a huge chunk at once.

cabbagebrains

Thanks for the reply daisyflower, I didn't read it before I posted my last reply.

I am hoping we won't be out of work long & have started applying for new jobs already, but there is little around either of us have the skills for at the moment, and I am assuming a lot of competition for the jobs we can do.

cabbagebrains

sh1305 wrote: »

That depends if you pay off the minimum repayments or a huge chunk at once.

I would mean just paying our standard interest-only payment and the normal bills we pay each month.