Is paying off credit card deliberate deprivation of capital regarding JSA?

Bishy

I have credit card debt that I could pay off from the equity of downsizing my home. However I am not working and can't claim benefits as I have over £16K in savings. If I pay off the credit card debt of £7K, will this be seen as deliberate deprivation of capital should I need to claim job seekers allowance in the future?

rogerblack

It may be, yes.
Unfortunately, there is no hard and fast rule.
Are you at the moment in employment?

It has been decided by the courts that it is not deprivation if the primary goal of the repayment is to avoid future extreme interest costs.

However, the decisionmaker may choose to take the position that you paid off the cards to get (more) benefit, not because there was another primary reason to pay them off.
Clearly, in some cases it would make sense to pay them off - for example, if the interest was equal to your JSA.

Are you currently in employment?
If so - unless there is obvious reason why you would not get another job - that would argue against deprivation of capital.

pmlindyloo

All these cases are looked at on an individual basis.

Generally the 'rules' are deprivation will be considered if the money was deliberately used to lower their capital to obtain an income based benefit.

Paying back of debts early could be seen as deprivation. It would not be considered deprivation if you were threatened with legal action if the debt wasn't paid back.

Also, if the credit card had very high interest rates then paying it off may not been seen as deprivation.

Of course, the longer time between when you paid it off and when/if you claimed JSA the better.

You may get various replies to this and people telling you of their experiences. However, in the end it is a decision that would be taken considering all the relevant information.

pmlindyloo

A link for you.

http://www.dwp.gov.uk/docs/dmgch29.pdf

29832 onwards