Housing benefit and lending money out - please help!

spud8385

Hi there,

I am in a situation where my sister, who I am renting with, is moving out to live with her boyfriend. I am a single mum on a part-time income and only claiming tax credits, however I now cannot afford to live on this and need to claim for housing benefit. After my divorce I had a lump sum quite a bit over £16000 from the sale of our house, which I have leant to someone for a building project. I will receive this back, plus some interest, but not for a while, and there is no way to get my money out early. Would this count as "capital over £16000" with the benefits people? And if so what can I do, there is no way I can access this money and I will end up on the street with two young children!

Please help!

nannytone_2

how long ago was this money in your possesion?

as a single parent, only working part time, did you really consider it wide to part with your only financial security?

spud8385

It was in my possession just over 6 months ago, and I have lent it as I should make some money on it, I want to save for a deposit for a house for myself one day and there was no point it sitting in the bank doing nothing at the time, as I was able to get by day-to-day on my income and tax credits. I should get it back in 6 months to a year, at which point obviously I would stop my benefits claim?

nannytone_2

you should be ok if it was over 6 months ago.

the worry is that the council will think that you deliberately deproved yourself of this money in order to claim benefit.
but looking at the time that has elaosed since, you may be lucky.

when you do receive this money back, you will lose any entitlement to housing benefit again

missapril75

I'm not sure there is anything on the application that even asks about historical capital, unlike other forms that might indicate the possibility, as well as maybe asking if anyone owes you money.

In any case, for a decision on deprivation to go against you, it has to be decided you disposed of the money for the purpose of qualifying for benefits (or an increase) you would not otherwise have been due.

In other words they'd have to say you knew in advance (6 months ago) that your sister was moving out leaving you with more rent to pay and acted to prepare for that.

coffeelover65

You'll need to provide your bank statements showing the money in the account and when it left. You'll also need to provide details of where the money has gone to (contracts / letters, name, address of the person/business who's received it). Also confirm in writing the dates you loaned out the money, when you expect it back, and the date your sister left. They'll need all this information to make a deprivation of capital decision.

ILW

Surely the loan outstanding is a form of capital (asset) as far as benefits are concerned? Just like stockmarket investment etc.

antrobus

spud8385 wrote: »

.... Would this count as "capital over £16000" with the benefits people?....!

Probably. But only the DWP themselves could answer the question, although the DWP manual will provide some direction.
http://www.dwp.gov.uk/docs/dmgch52.pdf

P.S. Deprivation of capital does not apply because the OP has not deprived themselves of any capital. They still have it. The only difference is that currently it takes the form of a debt due from x, as opposed to being a debt due from a bank.

Edit:

ILW wrote: »

Surely the loan outstanding is a form of capital (asset) as far as benefits are concerned? Just like stockmarket investment etc.

That's what I think, anyway.

midnight_express

you will be asked if anyone owes you money, so you will need to declare it

spud8385

I have a written contract signed by myself and the person I loaned it to, stating the amount and when it should be repaid by. The money was loaned well before I knew my sister would be moving out so I am not worried that the DWP will think that I have done it on purpose, I am only worried that the fact that I will be getting it back at some point would affect my claim in the meantime? As otherwise I am not sure how I can afford to get by?! The amount I should be able to claim, according to the benefit calculator, is about £400 a month, it is a shortfall that I just cannot make up, I am working part-time but can't increase my hours as I have kids in school. I have never claimed benfits before either?

ILW

Can you not tell the person you loaned it to that you need it back?