Struggling to repay after benefit fraud

shearersWAG

I posted this thread on the debt free wannabe board but I thought this was more appropriate. Should I delete the other post?

Hello,

This is my first post, on behalf of a friend. (I saw all of your disbelieving faces, but on this occasion, it's actually true!)

I literally don't know where to start explaining everything, my head is scrambled with all of the stuff she's told me but I'll do my best to get it all down.

Firstly, she has recently been convicted of benefit fraud (claiming as a single person whilst living with a partner). The overpaid HB and CTB are being paid back in monthly instalments outside of court, as agreed with the council. The conviction is in relation to overpayments of Income Support.

She is working part-time, and living with a partner who works full-time.

The second point I'm cringing over whilst writing this is here - she's just told me during a very stressful conversation that (despite the conviction) she is STILL claiming tax credits as a single person. I would have thought that was picked up by the systems by now, but apparently not. I have told her, in no uncertain terms, that she can't do this and needs to get straight on the phone to tax credits and tell them the truth, but what does she say? The conviction covers from 2009, so if she tells tax credits she's been living with a partner all that time, the overpayment is going to be massive and she's already struggling with everything. Please don't shout at me, I don't condone for one second what she's done (and continues to do) but I have been in a tough financial situation myself and I do sympathise with her that things have got this bad. I will admit that a lot of her financial problems are due to living outside her means for a long time, but she honestly feels trapped.

I hope I'm not upsetting all the tax payers out there - I'll point out AGAIN that I don't condone benefit fraud, but I can't just turn my nose up at a friend who is in such trouble.

Second, she's been relying heavily on (deep breath) wonga for 'short term' loans that she's constantly having to extend - because that's the nature of the beast, isn't it? She currently owes them £900 ('valued' customer!!) which is due 4th April, but she's just cancelled the debit card that they're due to take the repayment from. I've advised her to contact wonga to arrange a repayment plan, but I think she's so far gone with regards to her finances that £900 to wonga isn't really registering as a big problem.

The biggest problem is the priority debts that have come up since the benefit fraud investigation and conviction. She has repayment plans in place for:-

£100 housing benefit
£100 council tax (although the council are instructing bailiffs as they have a scheme in place that means they want all overpayments paid back within 6 months, so they want £550 a month)
£75 income support
£50 tax credits overpayment from 2008/9 (bearing in mind they don't know she's had 3 years claiming as a single person fraudulently)

Her rent is £760 a month (her actual HB allowance is £600 according to HB website I just checked) and because of their earnings they aren't entitled to any help with this. Plus, with overpayments and a fraud conviction, I don't even know if she'd be allowed to claim for help even if they were entitled to it.

I've done a rough breakdown of her incomings and outgoings with her, and to be honest I can't see how she can get back on top. As well as the priority debts, they have outstanding debts on a credit card (in their name), a loan (in her mum's name), a loan (in their name, but defaulting on at present I believe).

The questions I have are:-

How important is the wonga loan?
Is there anyone she can speak to to get help sorting out the debts that she obviously has to pay back (government, council etc)?
What on earth does she say to tax credits?

Sorry that I've rambled on so long. I'm usually good with advice (and before you say it, no I didn't know she was claiming as a single person, or I'd have advised her strongly against it) but I am at a loss here.

And she is doing community service if that cheers any of you up a bit

BigAunty

The Direct Gov website is an excellent starting point for debt management, so, too, the Debt Free wanabee board. Priority debts are things like council tax, rent - consumer debts are lower. The Direct Gov website is good at explaining priority debts.

She can also speak to CAB - they have experience in helping people re-arrange their personal finances/debts.

Rather than do a rough budget, download the MSE budget planner and do a thorough and accurate one.

Chrissiew

Cancelling her debit card for wonga will not help, its a recurring payment so they can still take the money even if the card has been cancelled, strange I know but thats the nature of the beast, if she hasnt got money in the account they will keep trying, just small amounts at first, say £20, then 30 mins later they will try for a bigger amounts and so on untill they clear the account, and there will be nothing she can do about it, the only way to be sure they wont clear her account is to change bank accounts completly to another bank.

Its an awful debt to have but compared to the others its the lowest priority, if she phones them up and explains the situation they may take a payment plan, from all accounts Wonga are quite good at agreeing to that, BUT from what you say she wont have the money to pay even a small amount each month to them so she might just have to put them on the back burner for a while, explain to them her situation, its very doubtful they will be sympathetic towards her but they cant get blood out of a stone, she will get threatening letters and phone calls, but if they send her one saying they are sending people round to collect the money dont believe it, they wont do this, and even if they do she doesnt have to let them in or give them any money at all, they are not bailiffs and dont have the power of bailiffs but they will try it on so just tell her to stand her ground on that one, Im not condoning not paying them but at the moment there seems to be nothing she can do about that.

With being convicted of fraud, especialy where the claimant has said she is a single parent living on her own but really lives with a working partner, she will find it very hard to get benefits again, if she splits up with her partner and claims IS she will be treated as if she is commiting fraud again, what I mean is she will be interviewed more throughaly (sorry can never spell that word) than any other claimant and she will probably get investigated every so often, including being spied on secretly.

Are there any kids involved? If not why was she claiming income support and not JSA?

shearersWAG

To be fair, if she does have to claim benefits again, she deserves to be watched closely. And I am very annoyed that she hasn't been honest with tax credits, especially after all the stress everybody went through the first time she got prosecuted. Nobody wants to see her going through all that again, especially as she was very lucky not to go to prison this time, with the amounts involved. But she's a good friend, and no matter how she's got herself into this situation, I'm not going to turn my back on her.
Her and her partner have 2 kids, and because she was claiming as single and not working she got IS.
I've told her about Wonga's ways of taking the money, so I'll advise her to change bank accounts as soon as possible. I've also suggested to go to the CCCS, as I think it's obvious she needs serious help with budgeting in general, and to help her manage these debts.

Emmzi

other than a) move banks and b) visit CCCS there is nothing you can do - next you'll be tapped up for cash, and by that time, you aren't friends any more.

look after yourself.

BigAunty

shearersWAG wrote: »

... But she's a good friend, and no matter how she's got herself into this situation, I'm not going to turn my back on her.
...

She is greedy, rather than needy, and lacks integrity. We all allow our friends certain flaws but I would never remain friends with someone of a deceitful nature - i've been exploited before by a canny person with a sideline in sob stories, never again. The type of behaviour that makes her unreliable with personal finances and benefit fraud probably creep into other areas of social and family life.

She's probably really enjoying how she's managing to direct you to do all her bidding, cushioning her once more from the reality and consequences of her behaviour as you run round trying to resolve her self-inflicted problems.

Dunroamin

BigAunty wrote: »

She is greedy, rather than needy, and lacks integrity. We all allow our friends certain flaws but I would never remain friends with someone of a deceitful nature - i've been exploited before by a canny person with a sideline in sob stories, never again. The type of behaviour that makes her unreliable with personal finances and benefit fraud probably creep into other areas of social and family life.

She's probably really enjoying how she's managing to direct you to do all her bidding, cushioning her once more from the reality and consequences of her behaviour as you run round trying to resolve her self-inflicted problems.

I agree with all of this. If the person in question is actually a friend and not you, why are you making all the enquiries for her rather than suporting her in doing it herself?

Whether because you're a nice person or whether it's because you're nosy, I really think that you should stay out of this as none of it's really any concern of yours.

shearersWAG

She doesn't have internet at the moment, as her laptop is broken and she doesn't have external internet at work. Plus, she probably wouldn't even think to look online. I did ask her before I posted, and I've been sending her all the advice as it pops up.
I am naturally nosy, I'm not going to deny that, but that isn't the case here. She came to me with the problem, I didn't know anything about her finances until she told me about being prosecuted. To be perfectly honest, I'd rather not know because I find it frustrating and worrying. But she came to me for help, and when I Googled about Wonga and cancelled bank cards, this forum came up and I saw how much experience there was in all things money-related, so I suggested I post to ask for advice on her behalf. I don't think that particularly makes me a nice person, just a friend.

AnxiousMum

She can try increasing her income - get more hours so she is working full time rather than part time?

She was living beyond her means? Does she have things she can sell (things she likely shouldn't have been able to buy in the first place) to repay some of this debt?

Surely her partner also benefited from the fraud......as he's working full time, can he not assist with some of the payments?

Does she drive by chance? If so, she'll be saving money once she notifies the insurance company of her fraud conviction.....they simply won't insure her.

Blackpool_Saver

Can I ask a personal question please, Is this person ill, I mean is there a mental problem, surely there must be, this is a genuine question.......

Soapn

benefit fraudsters should be sent to prison---not what you want to hear I'm sure, but that is my opinion. She should inform tax credits how she's fiddled them and take the flak all the way back to when she started lying and cheating: may as well get it over with now.