Pay more on overpayments through spending overdraft?

Cazza1

Hello there,
Am hoping for a bit of advice. My other half and I have incurred a housing benefit overpayment from when I was a student. Long story to do with grants, student loans and OH being self employed with unpredictable income. Anyway long story short we owe 1200 in housing benefit and 300 on council tax. Have sorted payment plan for council tax of 100 a month.

The thing is that I am able 2 get rid of my cc debt in full, which needs 2 happen before april as tax credits go down and I won't be able to pay off what I am now. This leaves me with overpayments to pay back. The one for 1200, the council tax one which is in hand and another one to a collection agency as my old job before I started uni overpaid me by 385 when I left to go to uni and I didn't notice as I never checked my account back then!

I also have a 1750 overdraft. After I've paid my credit card this month, plus all the household bills I will be 1300 overdrawn. Should I spend the remaining 450 on the housing benefit overpayment or just continue arranging a payment plan at an affordable rate of about 20 or 30 a month which will take an age to pay off? Next month after bills I'll have a spare 280 and again should I throw this at the overpayment or keep in my account so that I'm becoming less and less overdrawn each month?

I handle all the household finances now as my OH has gone bankrupt and earns v little from self employment. I work part time and we get tax credits. We were told by housing that due to the drop in tax creds that we will probably be eligible for housing benefit from the end of march and then the overpayment can be taken out of this. I just don't know if I've got it in me to go through the whole housing thing again as its been super stressful.

I just want to be out of debt now but its soooooo hard with being on such a limited income.

Hope someone has some advice.

Thanks,
Caz

Clarie_2

Hi,
well done for managing everything well this far.
If you are charged more interest on the overdraft than on the housing benefit repayment, carry on as you are, getting out of the overdraft and paying a token amount to the council. Then when you are back up to 0, you can throw money at the council. How does that sound?

Clarie

natlai

Hi

I agree with Claire about the overdraft first as HB overpayments don't incur interest.

In regards to reapplying for HB/CTB best advice is that whenever you get a new award notice hand it in. Your OH with have a set of profit and loss accounts ending March 2010 hand them in and if the income has gone up since then give them a 6 month projected forecast of what he has been earning.

Hope this helps.

Cazza1

Thanks for the replies guys!
Yes that makes sense to me, think I just needed some reassurance that it was the best plan. I finished uni in the summer last year then had 4 months waiting to start my job and being at home with our son who is 19 months. Hence why the overdraft and credit card got used so much. Soul destroying as my account was always in credit during my final year and my cc had a balance of 0. The 4 months really exhausted these hence the debt now.
I always reported changes 2 the council but it was sooooo stressful having LO between 1st and final year I never kept on top of oh's income and what he was declaring. He needs a kick up the bum in every aspect of finances hence the overpayment being incurred. Wish I'd been more on top of this but all I could think of was my finances, looking after LO and getting all my work done.

I have emailed housing with a statement of affairs and a figure for what I can afford to pay for the next couple of months. Then it can be revised once our application is in? OH has had some more work offered so it is likely that when this starts we won't be entitled anyway. Then I'll just need 2 get some money out of OH. Not that easy as I don't think he's had his lightbulb moment but he does get some income paid into my account- where all of the finances come out of and this means hopefully an additional 400 ish in april which will again bring me further out of the overdraft.

The debt isn't huge but when the income is so small its hard to make progress with it. So glad to pay off the CC as it has a balance of £1666 at 27.9 apr!!! It used to have an apr of 16% and they have put it up but I don't know when they did this. So its a v expensive card now, they have increased my limit as well to £4000-how is that a good idea eh? I didn't ask them to!

Just hope we can afford to live once tax credits go down, although if OH gets more work we should be ok.

Sorry for the rant but this is really stressing me out. All bills, food shopping etc is as low as we can get it and we don't do anything ever! Bit soul destroying but I just don't want to be in debt anymore.

Caz x