Overpayments of S.M.I

benidorm59

Wonder if anyone on here can help me please.
My sister has been on Income Support as a carer for years and has always found it hard to get by.
The Social was payinng interest on her mortgage direct to the Nationwide. In January this year she had to move into rented accomodation, to be honst I dont know what happened to the house, she didnt sell it but she told her local council. She thought that they would tell the Social, she is very busy and I think she takes things for granted. The council told the Social in June she had moved and now she has an ovepayment for help with her mortgage. CAB have told her Nationwide should return the money to the Social and she doesnt have to pay it back. Who is right ?

Caz3121

Was she also claiming housing benefit for her rent.
Think you need to know what has happened to the house and mortgage. If the mortgage is still running and she had not been making alternative payments then payments are still due by her and I would have thought that she would be responsible for paying the amount back that were not due to her. I would assume that if Nationwide were to pay it back she would be heavily in arrears

If she was making mortgage payments herself or the mortgage had been paid off by sale of property etc then then the smi payments would have put the account in credit and in this situation it would seem right that the Nationwide refund this money

benidorm59

I think the house was repossessed to be honest, she moved from the house into rented accomodation supplied by the council.
She hasnt told me everything but has this overpayment now in regard to her mortgage.
If this is the case then can they recover it if Nationwide dont send it back, its awful I know she should have told them she had moved

Horseunderwater

1. SMI has to be returned to DWP by her lender as soon as possible.
2. If it was repossessed/key handed back, then lender will auction house off, which will clear arrears - but not necessarily the capital amount borrowed.
3. Once that has been actioned, the next step might be bankruptcy - busy or not she needs to talk to someone from either stepchange or national debt helpline. Their advice is free & impartial.

rogerblack

On another matter - if she ended up with more than several K savings, due to any equity in the property - or if she could have if she had acted in a different way, then in principle there may be questions about her entitlement to IS, as she has too much capital.
(6K starts being reduced, 16K stops)

benidorm59

The house was repossessed apparently and there was negative equity so no money came back to her and she still owes money, but she still has to repay the SMI paid after the repossession, which doesnt seem right.
She has been into Nationwide branch but doesnt seem to get anywhere.

rogerblack

Horseunderwater wrote: »

Deprivation of Capital/assets only becomes a problem if
a) It actually exists in reality (not a might have scenario)
b) That money is spent on luxury items like a cruise in one go in order to realise more benefits from DWP/LA. An example BTW.
If money(savings) are over £6k, then you are allowed to spend it at a reasonable rate which would average around £100/week over a year. So buying a new oven or other white goods to replace non working ones would be OK.

This is an extreme oversimplification.

A house you are living in has a capital value.
This is (to simpify) the amount you'd get by selling it - less any obligations secured on it.
While you are living in the property, this is ignored for the purposes of means tested benefits.
When you move out, it ceases to be the case.
If, for example the property had some equity in it when you moved out, and you simply handed back the keys and did not make any effort to recover this equity, then you may be treated as if you have 'notional capital'. A virtual bank-account of money you could have had - added to your real capital, that is used in calculations of your assets.
This, or any capital actually received may cause concerns about deprivation of capital.

The 'excess spending' you mention is to avoid more of the actual capital you have being converted into notional capital - there is no hard and fast rule as to what is acceptable.
Some decision-makers may accept foreign holidays, others may quibble about purchasing items not on supermarket 'basic' ranges.