Question on benefits

md2012

Would really appreciate some help on this.

I'm being made redundant on February 28th after 23.5 years working for the same company. I've been there since I was 16 and have never been unemployed before.

I have a redunancy payment of £22,000 and credit card debts of £18,000, should I use the redundancy payment to settle all my debts?

Would that be wise to do so, a friend tells me that may affect my ability to claim benefits?

Indie_Kid

If you claim contributions based JSA, it won't affect your claim.

nannytone_2

Indie_Kid wrote: »

If you claim contributions based JSA, it won't affect your claim.

but it coulld affect housing benefit and council tax support.
credit card debt isnt a priority debt so any unecessary payments ( ie... payments of more than the minimum necessary) may be seen as deprivation of capital

md2012

No, I'm single and living alone, I have a mortgage which I'm 4 years into, I wouldn't be looking at using my redundancy to pay off a lump sum of my mortgage, I'd prefer to make my monthly payments as usual.

The credit card debt is what I would like to clear, would that be classed as deprivation of capital?

Indie_Kid

It would be, yes. The minimum repayment isn't classed as deprivation of capital.

rogerblack

Indie_Kid wrote: »

It would be, yes. The minimum repayment isn't classed as deprivation of capital.

It may be - however it is sometimes considered legitimate to pay back credit cards in full if the interest rate on them is high, and you can't service it any more.

At 18K, many credit cards will want at a minimum most of your JSA.

With savings of 22K - you will never be entitled to JSA-income-based.

(There is no issue with the first 6 months of contributions based).

I wonder what would happen if you phone your credit card company and tell them you are now on JSA and have had a large redundancy payout.

In principle if the CC people were to decide to withdraw your credit - you would have no choice but to repay.

Caz3121

much will depend on how confident you feel that you will be able to secure another job in the short term.

If you leave yourself only £4k and you have no other income other than the £72 for 6 months then nothing, how long would that £4k last you with mortgage payments, council tax, other bills etc, what would you do when that runs out?

Maybe better to look at your biggest interest debts and make a contribution towards that leaving yourself enough in the bank to keep you going with an intent that when you get back into work you can clear the rest assuming you have enough left in the bank

My husband was made redundant and had a similar scenario. As I was working and could pay the bills he did pay off all his debt with the redundancy but would have been scuppered had he been alone as it was 13 months before he was back in work

md2012

I have the debt spread out over 3 cards, all on a 0% rate which expire at 6 monthly periods between June 2014 and June 2015. Maybe I should continue to make the minimum payments until the 0% rates expire?

Would I be correct in saying that after the 6 months contributions based jsa claiming, if my redundancy payment is less that £16,000 I would be entitled to claim income based jsa and mortgage interest help?

Thank you all for your help, hopefully I can find work quickly and none of this becomes an issue but I would just like to know my worse case scenario.

missapril75

It may be 0% now but when it goes back to the normal rate that's going to be a fortune in interest charges. What, around £20 for every grand? £360 a month?

While you are taking advantage of the 0% you will be getting closer to the time you might need to claim income based JSA and deprivation will be a much bigger issue then because you will officially be more into - and thus more aware - of the benefits system.

Too many people apply their opinion about whether deprivation will apply. It's not about what they'd like to see it's what the law says.

And for deprivation to be ruled the DWP has to show that the sole or main purpose of disposing of the money was to claim benefits that would otherwise not be due.

If you're going to be on JSA conts only for up to 6 months with full expectations of getting back into work, avoiding throwing away £300 plus in interest payments every month would be a damned good idea.

That would dominate my thinking 100%.

md2012

I would like to clear my credit card debts as soon as I receive my redundancy payment in 1 week, would this definitely be the wrong thing to do?

Without that debt hanging over me I would still have enough left from my redundancy to pay my mortgage for 10 months

xylophone

https://forums.moneysavingexpert.com/discussion/4605483